To Be or Not to Be Additionally Insured
You contract a snow removal service to make sure the walkways are clear of icy hazards when one day you get a call that a tenant has slipped and fallen by the mailbox. You could have sworn that the mailbox was included in the contract, and it was, but the contractor had a lapse in memory and forgot to do it that day. The tenant sustains a serious back injury and sues the condo association. Not wanting to pay the tenant’s medical bills, the condo association turns around and holds the contractor responsible for the injury. And morally speaking, the contractor is the guilty party, but legally the association failed to name itself as additionally insured on the contractor’s insurance policy, making the road to recourse a very bumpy one, to say the least.
Benefits to Naming Oneself Additionally Insured
To be additionally insured means to attach your association’s name to the contractor’s policy so you are protected when someone makes a claim. This is especially recommended if your association has no workers’ compensation policy in place. Besides the obvious, naming your association as additionally insured also carries a number of other benefits.
- When you are listed as additionally insured, the insurance company must inform you when the policy is canceled or when their behind on payments. From there, you can choose either to find a new contractor or bring the issue to the contractor’s attention.
- Tenant claims that arise from contractor workmanship can be defended in court as a fault of the contractor and not the association. This protects you from a future surcharge.
Misconceptions to ‘Additionally Insured’ Designation
On the flip side, many associations believe that being additionally insured is the be-all and end-all of protecting oneself against claims. This is also not true. Often times, whether or not the insurance company will pay out depends on the specific coverage’s and exclusions to the contractor’s liability insurance policy.
For example, if a DISH technician damages the roof and has that damage excluded from his liability policy, the insurance company is not going to cover it regardless of whether or not you are additionally insured.
Should You Be Additionally Insured?
Absolutely, it’s better to be additionally insured than not. But before you on-board a new contractor, be sure to analyze their policy with a fine tooth comb and ask lots of questions!
If you need help, you can always call me at 617-612-6504 or email me at brendonkilcoyne@hkinsurance.com.
