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What it Really Means to Lower Your Umbrella Limits

We are all aware at this point that the Umbrella market is still in turmoil.  Although having a 100 million dollar Umbrella limit is not necessary, we are all lowering our Umbrella limits to provide savings.  Rightfully so, it is outrageously expensive to maintain an Umbrella at all – let alone the higher limits that are available.  But what does lowering your Umbrella limits really mean, and what should you be looking out for even more now?

In a nutshell, you have less liability coverage than you did before, which means you have to be extra careful about who you are letting into your building.

If you haven’t already, you need to do an extensive review of your contractor’s insurance before allowing them to enter the building and provide any work.

In New York especially, Labor Law is a doozy for building owners. If there were to be an injury to a contractor or subcontractor (employee), it basically puts all the responsibility on the property owner or Association.  You must make sure you receive and review the following from your contractor before allowing any work to be done:

  • A certificate of insurance
  • A copy of the insurance policy that is in place (a certificate is a snapshot of coverages and will not indicate if there are any exclusions)
  • A copy of the written contract
  • A copy of the indemnification agreement/Hold Harmless agreement or risk transfer documentation that puts the responsibility on the contractor and off the Association/property owner

We are no longer in a time where we are able to hire a friend, cousin, or neighborhood handyman to quickly do a task or two.  Everyone must have the proper insurance, or it is not worth letting them do the work.  Without the high Umbrella limits that most property owners and Associations used to maintain, we have less liability coverage in the event of a lawsuit, and injury to an employee/Labor Law litigation can get extremely costly.

Always refer to your broker for help reviewing contractor coverages and risk transfer documentation, and reach out to me with questions anytime!

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