Insurance requirements

What coverage to require

Every vendor contract should require proof of coverage before work begins, not after a claim shows up. The categories to require, regardless of vendor size:

The specific dollar limits your association should require depend on your risk profile, the scope of the work, and your insurance advisor's recommendation. There is no universal number here; ask your agent or broker to set limits appropriate to each vendor and each job.

Certificate holder is not additional insured

A certificate of insurance is the document a vendor's insurer issues to show coverage in effect on the date it was printed. Listing the association as "Certificate Holder" on that form means the insurer will send it a copy; it does not extend the vendor's coverage to protect the association at all.

An insurance broker's guide to reading a certificate of insurance explains that only a policy endorsement, not a line on the certificate, creates additional insured status, and that status is what actually gives the association a right to defense and indemnity coverage under the vendor's policy for claims arising from the vendor's work. Ask for the association to be named as an additional insured on a primary and non-contributory basis on the vendor's general liability policy, and confirm it with the endorsement itself, not just the certificate.

This is a separate protection from indemnification, the contract clause where the vendor promises to cover certain losses. Insurance is what actually pays the claim; indemnification decides who owes what if the insurance falls short.

Keep certificates current

A certificate of insurance is a snapshot, not a lifetime guarantee. HOA vendor-management guidance recommends collecting a fresh certificate for every active vendor annually and again whenever the underlying policy renews, since a policy can lapse or change between the day a contract is signed and the day the work actually happens.

Track each vendor's renewal date on a contract renewal calendar, and treat an expired or missing certificate as a reason to pause work, not a paperwork detail to chase down later. For larger construction jobs, consider requiring a performance bond as an added layer of protection if the contractor fails to complete the work; the Small Business Administration guarantees these bonds for small contractors who might not otherwise qualify, separate from whatever insurance and indemnification language the contract also contains.