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Quick Tip: The Risk of Individuals Hiring Contractors

It is always best for a property owner or board to hire a contractor, rather than a unit owner or tenant- Amanda explains why.

You cannot prevent someone from suing you, but what you can sometimes do is transfer the risk. That is easier accomplished when the property owner or board is hiring the contractor, as opposed to a unit owner or tenant. Then they can dictate the terms, including having a signed contract and making sure the contractor has proper insurance, both of which are imperative.

Most contractors have Blanket Additional Insured in their policy which basically says any party required to be named as an Additional Insured is automatically one as long as there is a written contract stating such. Additional Insured status provides the interested parties, like the property owner or association, with coverage under the contractor’s policy- thus transferring the risk from their own policy to the contractor’s. It may be tough to do this without a written contract between the owner/tenant and their contractor.

In addition, if an owner or tenant is hiring the contractor, the property owner or board may not be able to get a copy of the contractor’s insurance policy to review. This can be an issue, as contractors often have a policy that has detrimental exclusions that may restrict the ability for the property owner or association to transfer the risk. Owners and tenants should follow the same guidelines as the property owner and boards do.

For more information please contact us.

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