Did you know that most contractors are experiencing substantial rate increases and many insurers are limiting or actually not covering for work on condominiums and townhouses? Because the insurance market has changed so dramatically over the past few years it has become extremely important for Community Associations and Property Managers to make sure that your contractors’ insurance policy names the Association as additional insured.
For the financial safety and longevity of your Association, you must ensure that the contractors you hire have the proper coverage in the event of a loss. The following questions will help when hiring a contractor and/or requesting insurance information.
Be sure to ask:
- Does the policy contain exclusion for condominium or townhouse work? If so, is it for new construction only or for any type of work performed? (Keep in mind, some forms of coverage allow the contractor to work for the unit owner, but not the Association)
- What is the policy deductible in the event of a loss? Does the contractor have the financial means to cover the deductible?
- Does your roofer have coverage for “cover-up” and “torch-down” work?
- Have you requested the certificate of insurance naming both the Association and the Management Company as additional insureds? (Make sure this is signed by the agent or broker)
- Does your contractors insurance have occurrence or claims made coverage forms?
Don’t be afraid to ask questions. You need to in order to protect your Association. In many cases, you may need to speak directly with the contractors’ agent or broker. Never assume that just because the contractor has a policy, that your Association is properly protected.