Sift Through the Blizzard of Fine Print in Snow Removal Contracts

Attorney Ken Jacobs, a partner at Smith, Buss & Jacobs, says that contractors try to pass on the liability in such situations to the boards – or, at the very least, limit their own liability. “This is one of the big issues with snowplow contractors,” Jacobs says. “They strongly fight to limit their liability in their contracts. They fight to limit it to the amount of their insurance coverage – $1 million or $2 million. They say, ‘Our liability is limited to the scope of our insurance coverage for any accident or occurrence.’"

One attorney, who requested anonymity, notes that boards often don’t question the liability stances taken by the contractors. “I've seen a lot of condos and Homeowners’ Associations that just sign the contract,” the attorney says. “The contract has no reimbursement, no indemnification, no liability provisions. I am appalled when I see that in some buildings, but everybody shakes hands anyway.”

If contractors didn’t try to limit their liability, they might have trouble getting insurance coverage. “I have a snow removal vendor that just went through four different insurance companies,” says Pamela DeLorme, president of Delkap Management. “It really wasn't his fault, but people will go out after a storm – when they shouldn't be walking outside anyway – and he's the one that gets caught, he's the one that gets the liability, because we've got the snow contract with him. The whole thing is insurance today. Everything is insurance.”

With that in mind, Lloyd Amster, president of Prime Locations, a management firm, offers two pieces of advice: “You've got to have good attorneys. We recommend that the attorneys review every contract, but [they should be extra vigilant with] something like a snow removal [contract] and try to pass the liability on as much as they can. Also, make sure you have all the insurance certificates from the contractor in order.”

Problems frequently arise because the manager fails to involve the attorney. Says Jacobs, “Most of the time the proposal does not get to us for review. Therefore it’s up to the managing agent to require indemnification as well as liability/workers comp/auto insurance via a rider. If the proposal does get to us, we might add a rider, which can also be used for towing services.”

Amster, the management executive, offers this tip to avoid liability during icy conditions: Be certain to have “the staff at the building going out any time at night to get started so that the areas will be safe when people start to leave the building in the morning. Also, have them [clean up ice and snow] in the afternoon when the sun is going down, and things start to ice up again. But the best thing that you can do is make sure staff is on top of everything, salting, sanding, and removing the snow.”

Adds Jacob: “An insurance broker whom I deal with who is knowledgeable about snow plow insurance issues tells me that a few companies offer good insurance to contractors, at relatively competitive rates. However, many contractors carry cheaper insurance that looks good on a certificate but whose policies actually contain numerous exclusions that expose the association to greater risk.”

Bottom line: read the fine print.