Our Condo Association Hires Outside Contractors To Perform Repair Work. What Are The Best Ways To Reduce The Risk Of Being Sued If Someone Is Injured By A Hazard Created By A Contracting Company?
Under the statute, if there are certain cost items that an association would pay for a vendor and it would exceed a certain percentage of the budget, there has to be a written contract with the vendor. If it is less than that, there does not have to be one. I always advise that if someone is going to be doing work, they could expose the association of some kind of liability, whether it is for personal injury or property damage. It is best to have a written contract. In that written contract with the vendor, you can have an indemnification clause, which says that if anyone gets hurt because of the vendor’s action and they sue the association, the association can come after the vendor to indemnify them for any damages that a judge or jury may award.
On bigger projects, I advise associations to make sure that not only does the vendor have sufficient insurance to cover an issue, if the association is sued, but also to add the association as an additional insured on the insurance policy. The association is then covered by the vendor’s insurance on top of any insurance that the association may have. The association won’t have to pay extra money, legal fees, or deductibles. One of the ways that the association can further protect themselves is to actually be listed on that vendor’s policy for whatever timeframe that the vendor is going to be involved in doing work.
What Should The Condo Association Do When It Learns That Someone Has Been Injured On The Property?
If there is a very slight injury, it does not make sense to run to the insurance company or the lawyer. The board has to be aware that they have a fiduciary duty to all the members to not waste money. If it is a very minor injury, then there may be some type of offer to pay for a small medical bill without contacting the insurance company or the attorney for the association. When in doubt as to whether the injury is minor or if it is major, whether or not the association is at fault, they certainly would need to put their insurance agent and carrier on notice. If you don’t notify them promptly, then you basically waive any kind of coverage because in all policies, you have to contact them within so many days of knowing that there is an injury. If you wait, then they could deny coverage legally.
If there is an insurance claim, it is a good idea to contact the association’s attorney. The insurance carrier may provide coverage or they may not. There are times when we go through all the way up until the point of trial and represent the association, even though they have an attorney who is hired by the insurance company, because the attorney hired by the insurance company is really more concerned with protecting the insurance company. The association counsel may defer and back off, once the insurance counsel gets put in place, but they may not. The association should inform the insurance carrier and the association’s counsel for anything that is not minor.
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