Insurance clauses

Certificate holder is not protection

Many boards treat receiving a certificate of insurance (COI) as the finish line. Being named as "Certificate Holder" on that certificate means the insurer will send the association proof that a policy exists, and nothing more. Actual protection, meaning defense and indemnity coverage under the vendor's own policy for claims arising from the vendor's work, comes only from being made an "additional insured," a status a policy endorsement creates. Language in the certificate holder box confers nothing on its own.

A vendor can hand your board a certificate naming the association as certificate holder and still leave the association with no rights under that policy if a claim lands. The clause has to ask for the right thing, not just a document.

What the clause should actually require

Write the clause to require three things: the vendor's general liability policy must name the association as an additional insured by endorsement; that coverage must sit on a primary and non-contributory basis, meaning the vendor's insurer pays first instead of sharing the loss with the association's own policy; and the vendor must send a new certificate every year and whenever the underlying policy renews, not only once at signing.

A certificate is a snapshot of coverage on the day it was issued, not a guarantee that the coverage still exists eighteen months later. Tie the refresh requirement to a written work order for the specific job rather than a phone call, so there's a record of exactly what the coverage is supposed to attach to.

Require categories, leave limits to your broker

The clause should name the categories of coverage the vendor must carry: general liability, workers' compensation, commercial auto, and umbrella coverage for higher-risk work like roofing or tree removal. Minimum dollar limits depend on your association's risk profile, the scope of the job, and your state's insurance rules, so confirm the right limit with your insurance advisor before it goes in the contract.

When a bond does more than a certificate can

On a contract large enough that the board is worried about the vendor simply not finishing, a performance bond is a different tool from an insurance clause. It's a surety instrument that guarantees completion of the work if the contractor defaults, and the Small Business Administration backs bid, performance, and payment bonds for small contractors who couldn't get bonded on their own.

Requiring a bond on a large reroof or repaving job is a due diligence decision the board makes independently of whatever insurance the contract also requires.