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Vendors' insurance can have dangerous exclusions built in.
AUTHORScott S. Greenspun and Jillian Menna
As many boards know, it is imperative that any contractor or vendor coming in to perform work must have general liability insurance that includes the building as an additional insured. But it is equally important that they are also listed as an additional insured under the contractor’s or vendor’s automotive policy if they are bringing any materials, equipment or supplies into or out of the building, or having them brought on site by a third party.
That’s because auto liability insurance provides coverage for any bodily injury or property damage that may arise from the use, operation and maintenance of a vehicle, including moving materials, equipment or supplies into and out of the building. If someone is injured while the contractor or vendor is moving materials, their auto insurance — not their general liability insurance — will cover any claims.
Here’s a common scenario: A co-op or condo contracts with a vendor to come onto the property to do some repairs in the lobby. A couple of days after work begins, a vendor’s employee is injured while unloading Sheetrock from the vendor’s truck. The injured employee sues the building; the building, in turn, sends the lawsuit to the vendor’s general liability carrier, assuming the vendor will cover the building as an additional insured. But the vendor’s general liability carrier rejects the claim because the accident occurred while unloading the truck and therefore should be covered by the vendor’s automotive insurance, not its general liability insurance. If the vendor doesn’t have auto insurance, it’s bad news for the board, since the building won’t be covered.
Automobile liability insurance is typically referred to in two ways. The first is “auto insurance,” which is used when the contractor or vendor owns its vehicles and uses them to bring materials, equipment and supplies in or out of the building; the second is “hired non-owned,” which is used when a contractor or vendor uses vehicles owned by others to move materials.
Boards and property managers should consult with their insurance broker to ensure that their contractors and vendors have automotive liability insurance and that the coverage is appropriate based on their operations. If that’s not the case, buildings should work with the contractor and its insurance broker to secure coverage — or, in the worst case, find another contractor.
Scott S. Greenspun is a principal at the law firm Braverman Greenspun. Jillian Menna is general counsel for Genatt V Insurance Solutions.