[IL][CONDO] Management Requires New Vendor to List HOA and Management Company as Additional Insured on Policy
I’m cross-posting this from the HOA subreddit.
We’re in the process of adding a few new maintenance vendors to our HOA vendor list for various work orders. I’ve screened a couple of them (considering location, hourly rates, insurance coverage) and connected them with management. However, management is now asking for their Certificate of Insurance (COI) and requires that the HOA and management company be listed as additional insured parties on the policy.
1) Is this a common practice?
2) Is it legally necessary?
3) Does this incur extra costs for the vendor to add these entities as additional insured parties to their policy?
Before I began searching for new vendors, I asked management about their requirements, and they only mentioned needing a W9 and COI. They didn’t mention the need to add extra insured parties until the onboarding process was already underway.
Thanks for your insights!
It’s great that you’re looking into the details of onboarding new vendors for your HOA. Here are some insights related to your questions:
1) Is this typical?
Yes, it is quite common for management companies and HOAs to require vendors to list them as additional insured on their insurance policies. This helps protect the HOA and management company from potential liability arising from the vendor’s work. It’s a standard practice in many industries, especially in property management.
2) Is this legally required?
While it may not be a legal requirement in all jurisdictions, it is a risk management practice that many HOAs and property management companies adopt to protect themselves. It essentially ensures that if a claim arises from the vendor’s work, the HOA’s and management company’s liability is covered under the vendor’s insurance policy.
3) Does this cost the vendor more money to add the entities as additionally insured parties to their policy?
Yes, adding entities as additional insured can result in increased costs for the vendor. Insurance companies may charge a fee to add additional insureds to a policy, depending on the insurer and the vendor’s existing coverage. The extent of the increase can vary, but it’s something vendors should factor into their pricing.
Since it sounds like the management was not upfront about this requirement during your initial discussions, it may be worthwhile to clarify the process and any additional costs with them to ensure a smooth onboarding experience. If the vendors have questions or concerns, they can also reach out to their insurance providers for more specific details about how this will impact their policies and costs.