Before authorizing a third-party contractor or vendor to perform work on the association's common areas, associations should make certain the contractor is licensed and has the following insurance:

• Workers Compensation. Workers' compensation policies protect injured workers.
• Commercial General Liability (CGL), CGL policies protect against lawsuits that may result from bodily injury or property damage arising from the contractor's work. The policy should include an endorsement naming the association as "Additional Insured" which provides additional protection to the association. However, such protections can be voided if the policy excludes coverage for multi-family developments.
• Completed Operations. This covers any damages that may arise after the work is completed. For example, if a new roof were to leak at some point after it was completed causing damage to the common areas and an owner's unit, a claim can be tendered to the roofer's insurance company.
• Errors and Omissions. Architects and engineers who prepare specifications for contractors or who consult with the association should carry E and O professional liability insurance. These insurance policies cover errors made by professionals.

Proof of Insurance. All contractors and vendors who work for an association should be required to provide the board with proof of insurance prior to the commencement of work.

Perhaps the most important item to look for when reviewing a contractor's insurance policy is whether it includes a "Multi-Family" or "Multi-Unit" exclusion. If it does, they are essentially uninsured if they perform any work. for a condominium association. If that is the case, do not hire the vendor or contractor.

Some policies are more explicit and will specifically exclude coverage for any work done by a contractor for a condominium association.

 

Contractors Required to Have Insurance

 

In California, all contractors are required to have workers' compensation insurance, even if they have no employees. Senate Bill 216 (SB 216) phased in requirements starting in 2023 for specific trades, with a full mandate for all active licensees by January 1, 2026, to curb uninsured, on-the-job injuries.

Failure to carry required workers' compensation insurance can lead to immediate license suspension by the Contractors State License Board (CSLB).

Even if you are a sole proprietor with no employees, you must comply with these regulations. If you hire anyone including subcontractors or day laborers, you are considered an employer under California law and must have workers' compensation insurance.

Property owners hiring uninsured contractors may be held liable if a worker is injured on their property.

Non-licensed handyman are considered Non-Licensed Contractors and must still comply with the law.

 

Handyman: Non - Licensed Contractors

 

Work on a project for which the combined value of labor, materials, and all other items on one or more contracts is $1,000 or less does not require a contractor's license. However, work which is part of a larger project, whether undertaken by the same or different contractors, may not be divided into amounts less than $1,000 in an attempt to meet the $1,000 exemption. Also, unlicensed handymen must provide the purchaser with written disclosure stating that they are unlicensed by the Contractors State License Board, or the $1,000 exemption does not apply.

 

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