Contractor and Vendor Insurance
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.
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