As part of our Problem Solved series, Habitat interviewed Jonathan Steward, a vice president/producer at O&S Insurance Brokerage Group.
What's the first thing a co-op or condo board should do when it gets ready to tackle a major capital project?
The most important thing they should do is to contact their insurance broker. That's one of the biggest things that we as an agency press for our clients – always to be in contact with your broker.
What can you tell them that’s so important to them?
Well, any improvements, any renovations that they're performing for their buildings, we always ask that they provide a copy of the proposal for the work. From there, we check their insurance policies, the contractor's insurance policies, make sure there are no major policy exclusions where liability would be put onto the condo or co-op board. Additionally, we utilize indemnification agreements to make sure that that's all in place in the contract.
A lot of boards think that if the contractor has a certificate of insurance, everything's OK. But that's not the case, is it?
That's not the case. Unfortunately, a lot of times the certificate only says so much. You do need a policy endorsement from the contractor, showing that you’re named as an additional insured. We also ask about the indemnification language to be used, essentially holding the building harmless for any losses that do occur. Additionally, we review the policy itself to make sure there are no policy exclusions that put the liability onto the building owner.
New York State's one-of-a-kind Scaffold Law states that if a worker is injured in a fall caused by gravity, the owner of the building is automatically at fault. Is that what's driving these exclusions and other changes in the insurance policies?
Yes, 100%. The Scaffold Law is actually the biggest issue, I believe, that New York real estate is dealing with right now. These claims coming in range from six to seven figures. It's pretty incredible how large they can be, and they’re easily avoidable if you contact your insurance broker, just to have a quick look at what's going on, make sure that something like that can't occur.
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I hear a lot of stories about exclusions. Here's one I heard recently. There was a roofer who had an insurance contract where his workers were covered – provided they were standing on the ground when they were injured. I don't know if that's apocryphal, but aren’t there some pretty strange exclusions in these policies that boards need to be aware of?
Yes. It's funny you mentioned the roofer exclusion because I actually came across an issue similar to that. About three months ago, I was reviewing an insurance policy and they had a contractor who was performing roofing work. And in there they had a height exclusion – roofing work with a height exclusion! There's no coverage there if anything happens above a certain height. So that's a big, big issue.
What's the best way for boards to make sure that a contractor does not have such exclusions in his insurance policy?
The best way to do that is to contact our agency or contact their broker and have them thoroughly review the policy. And from there, determine which exclusions they have on their policy. These policies can range into dozens and dozens of pages, and that's why we tell our clients, "Listen, contact us before you do any work. We'll dig into it. We'll do all the legwork, see exactly what we have an issue with, what we think is problematic. And from there, we'll make the proper adjustments or give our advice as to how we feel we're properly protecting you as the owner."
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