When hiring a contractor, there are three things an association board should consider before awarding the job: the contractors’ experience, the work contract and insurance.
The contractors’ experience can mean the difference between a positive experience or an extremely frustrating one for the board and the association members. It is always good to ask for referrals from friends, colleagues and neighbors who may have had a good experience with a contractor.
There are also several professional associations, the Builders Association of the Twin Cities (BATC) or the National Association of the Remodeling Industry (NARI), which the board can contact to receive a list of professional members.
Lastly, the association should conduct interviews. Start the interviewing process by researching the contractor’s Website and calling to verify that they have experience and expertise in the type of project the association wants done. Then sit down with the contractor and have a conversation about the services they offer and your expectations for the project.
Contracts & Insurance
When signing contracts, many associations inadvertently agree to let the association’s insurance cover the contractor. Those representing the association (board members and/or managers) should carefully read the insurance language in contracts and understand what they are signing. Adding the contractor as an insured on the association’s policy can lead to costly lawsuits that negatively affect the association’s history of claims and ultimately increase insurance premiums. Prior to signing a contract with a contractor, associations should:
- Make sure the contract requires the association to be named as an additional insured on the vendor’s insurance policy as relates to all liability arising from the work they are hired to perform via the contract.
- Request a certificate of insurance for both general liability and workers’ compensation prior to letting work commence. (As a general rule, general liability limits should be at a minimum of one million per occurrence.)
- Require the contractor’s insurance to be primary.
- Make sure the contract has an indemnity agreement that holds your association harmless and indemnifies and defends the association for liability which arises from the contractor’s negligence.