Prior to hiring a contractor, an association should confirm that the contractor has adequate insurance. Specifically, an association should require evidence of 1) workers compensation insurance, 2) commercial general liability insurance, and 3) vehicle insurance.
First, if the contractor has any employees, then an association should require evidence of Worker's Compensation Insurance. This type of insurance provides wage replacement and medical benefits to employees who are injured in the course of their employment. By requiring the contractor to provide evidence of worker's compensation insurance, the association is protecting itself from potential claims of the contractor's employees in the event they become injured while working in the community.
Second, an association should request evidence of Commercial General Liability Insurance (“CGL”). This type of insurance provides protection against bodily injury or property damage resulting from the performance of the contractor's work. For this type of insurance, it is important to speak with the contractor's insurance broker directly and to request to be named as an “Additional Insured.” Furthermore, the Association should request a copy of the CGL policy to check for specific exclusions. One of the more common exclusions to look for in CGL policies is the “Multi-Family Developments” exclusion.
Third, if the contractor will be driving one or more company vehicles in the community, then it should request evidence of vehicle insurance. This type of insurance protects the association and its members against bodily injury and/or physical damage resulting from the use and operation of a company truck, etc. It is prudent to make sure that the association's contractors / vendors have adequate vehicle insurance as construction vehicles often vary in the manner in which they are maintained, and drivers vary in the manner in which they operate their vehicles.
In summary, an association should require that its contractors and vendors provide adequate proof of insurance prior to starting construction work in the community. In the event that an association has questions about the adequacy of insurance or policy coverage, then it should consult with its own insurance broker or legal counsel.