The Renovation That Cost the Association $380,000
A condominium association in a 240-unit building approved a $185,000 lobby renovation. The general contractor was local, came recommended by a board member, and provided a certificate of insurance before starting work. The project manager filed it in the front desk drawer and work began.
Six weeks into the project, a contractor employee fell from scaffolding. The injury was serious - a fractured spine requiring surgery and extended rehabilitation. The contractor's workers' compensation carrier paid the workers' comp claim. But the injured employee also filed a premises liability suit against the association, alleging that the scaffolding setup violated building code. The contractor's general liability carrier reviewed the claim and noted that the contractor's policy excluded scaffold-related incidents above 15 feet - a standard exclusion the board had never known to check.
The association's master policy ultimately covered most of the $380,000 judgment. The association's deductible was $50,000. Its premium increased 28 percent at the next renewal. And the board learned a painful lesson about the difference between receiving a COI and verifying what it says.
Why Contractor Insurance Matters for HOA Boards
Condominium associations are property owners and, in the context of work performed on the property, function as general contractors. When a board hires a contractor to repair the parking structure, replace the roof, or renovate common areas, the association assumes legal exposure for incidents that occur during that work.
A properly insured contractor shifts that exposure: if the contractor causes property damage or an employee is injured, the contractor's insurance - not the association's master policy - should respond. An improperly insured contractor leaves that exposure with the association.
The consequences of uninsured or underinsured contractor incidents include:
- Claims against the association's master policy, increasing premiums for all owners
- Direct liability to the association for amounts exceeding the contractor's coverage
- Deductible obligations that may require special assessments
- Litigation costs regardless of ultimate outcome
Requiring adequate contractor insurance - and verifying it before work begins - is one of the most direct risk management actions an HOA board can take.
Types of Contractors Working in Condominiums
The range of contractor activity in a condominium community is broad, and insurance requirements should be calibrated to the risk profile of each contractor type.
Renovation and construction contractors. General contractors, subcontractors, and specialty trades performing construction, renovation, or major repair work on common areas, amenities, or the building envelope. These contractors carry the highest risk profile and should face the most stringent insurance requirements.
Routine maintenance contractors. Landscaping, cleaning, pool maintenance, HVAC service, elevator maintenance, and other recurring service providers. Lower incident frequency, but still capable of causing significant injury or property damage.
Amenity and event vendors. Vendors operating within the community for specific events - caterers, entertainment companies, fitness instructors, equipment rental companies. Often overlooked in insurance compliance programs, but capable of creating significant liability.
Unit owner contractors. Contractors hired by individual unit owners to perform work within their units. The association often has rules requiring proof of insurance before unit-level work begins, but enforcement is inconsistent.
Standard Insurance Requirements by Contractor Type
| Contractor Type | CGL Per Occ | CGL Aggregate | Workers' Comp | Auto | Umbrella |
|---|---|---|---|---|---|
| General contractor (major project) | $2M | $4M | Statutory + $1M EL | $1M CSL | $5M |
| Specialty trade (plumbing, electrical, HVAC) | $1M | $2M | Statutory + $500K EL | $1M CSL | $2M |
| Landscaping / grounds | $1M | $2M | Statutory | $1M CSL | $1M |
| Pool / aquatics service | $1M | $2M | Statutory | $1M CSL | $2M |
| Cleaning / janitorial | $500K | $1M | Statutory | N/A | $1M |
| Unit renovation (unit owner contractor) | $1M | $2M | Statutory | N/A | N/A |
| Event / amenity vendor | $1M | $2M | Statutory | N/A | $1M |
Requirements should be reviewed with the association's insurance broker annually and updated to reflect changes in claim experience and market conditions.
Master Policy Coordination
Condominium associations carry a master insurance policy covering the building structure, common areas, and the association's general liability. Understanding the relationship between the master policy and contractor insurance is essential for HOA boards.
The master policy is not a backstop for contractor negligence. When a contractor damages the building or injures a person while performing work, the association should first look to the contractor's insurance. The master policy should be the last resort - reserved for association-specific exposures, not contractor-caused losses.
To ensure this layering works:
Require "primary and non-contributory" language. The contractor's general liability policy should respond on a primary basis before the association's master policy. This should be specified in the contractor agreement and confirmed on the COI.
Name the association as additional insured. The condominium association should be named as an additional insured on the contractor's general liability policy. This gives the association direct access to the contractor's policy for defense and indemnification.
Require waiver of subrogation. The contractor's insurer should waive its right to pursue the association for amounts paid to injured parties. This prevents the contractor's carrier from recovering against the master policy after paying a claim.
Verifying Compliance Before Work Begins
The most important compliance principle for HOA boards: collect and verify the COI before the contractor sets foot on the property. Once work has begun, the practical ability to enforce insurance requirements is significantly diminished.
A pre-work verification process should include:
Request the COI from the contractor, not just verbal assurance that they are insured. The certificate holder should be the condominium association, identified by its legal name.
Verify coverage types and limits against the association's requirements for that contractor category.
Confirm the association is named as additional insured on a primary and non-contributory basis.
Check the policy expiration date against the project timeline. If the project extends past the policy expiration, require evidence of renewal before work continues past that date.
Verify workers' compensation coverage is in force for any contractor with employees performing work on the property.
File the COI in the association's records with the contractor's name, project description, and the verification date.
For associations managing multiple ongoing projects and recurring vendor relationships, the volume of COI management can become significant. Bramble helps property managers and HOA boards collect, verify, and track contractor COIs against the association's specific requirements - flagging gaps before contractors start work rather than after incidents occur.
See how Bramble manages condo contractor insurance compliance.