The following is not a comprehensive list of all HOA vendor insurance requirements. This information is for educational purposes and is not legal advice. Please seek legal counsel regarding the following information prior to implementation at your HOA.
The actions of vendors may get Board Members and your HOA Entity sued
so the following applies to existing and to all future HOA vendors:
General Liability insurance for contractors who make Building Improvements such as construction projects, roofing, painting, etc. should have their General Liability policy specifically endorsed to work on condominium or townhouse homeowner associations (HOA) and Planned Development (PDs) Common Interest Developments. Without the specific HOA Endorsement the contractor’s insurance may be null and void so may provide no protection to your HOA. Email the vendor’s insurance agent to confirm the HOA Endorsement is in place. Save their confirmation.
Almost all HOA insurance policies require (and to protect your HOA) you must ask all vendors to provide Annual proof of insurance (that you should retain in your HOA files):
1.Any vendor who brings a “helper” with them to work at your HOA should provide a certificate of insurance as proof the vendor has Work Comp insurance. If the vendor does not have Work Comp and the helper gets hurt then your HOA, by order of law, will become the secondary employer and become responsible to pay the medical bills (and possibly lost wages) after the helper is injured on your HOA job.
2.Simply being a “Certificate Holder” conveys no rights to legal defense or indemnification by the vendor’s insurance after the vendor’s actions get your HOA sued. Therefore have all vendors endorse your HOA as an Additional Insured on the vendor’s General Liability and Auto/Vehicle insurance.
The intent of being named Additional Insured is to make the vendor’s insurance responsible to pay for your HOA’s legal defense when the vendor’s activities cause your HOA to be sued.
In order for a vendor’s Blanket Additional Insured endorsement to be valid there must be a written contact between the parties and there must be a clause in the contract that requires the vendor to make the customer an Additional Insured and the vendor must agree to do so. (Have all vendor contracts reviewed by an attorney)
3.Obtain a certificate of proof of Auto/Vehicle Liability insurance with $1,000,000 as a minimum limit of coverage.
Obtain a copy of the actual Auto Additional Insured endorsement.
Case Law can hold the customer (the HOA) legally liable if a vendor is driving to or from an HOA job when the vendor has an at-fault auto accident so it is in the HOAs best interest to have all vendors’ auto insurance endorse the HOA as Additional Insured.
4.Obtain a certificate of proof of General Liability insurance with $1,000,000 as a minimum limit of coverage.
Obtain a copy of the actual General Liability Additional Insured endorsement.
The Auto and GL policy should be endorsed by the insurance company (or agent using a Blanket AI endorsement) to name the HOA as Additional Insured.
5.Call the insurance producer listed on the vendor’s insurance certificate to confirm the policies are paid up and in force.
To protect your HOA you should have all vendors sign an Independent Contractor agreement certifying that they are Independent Contractors (and are not HOA employees)
If the vendor is a Sole Proprietor have them certify that they work without helpers (and so may not be required to carry Work Comp insurance), but if they hire a “helper” or use a “helper” on any HOA job they agree to obtain Work Comp insurance prior to using a “Helper” on your HOAs project.
Note – Due to the increased cost to small vendors to obtain appropriate business insurance your HOA may selectively consider increasing the vendor’s fee to cover some or all of their increased insurance cost for the coverage that protects your HOA.
P.S. I don’t sell insurance for vendor’s/contractors, but can offer suggestions to your vendors so they can obtain what they need from their existing insurance agents.
Daniel W. Davis Insurance Solutions, LLC
Lic. # 0H40859