Why should I insist on proof of liability insurance?
Your strata or condo’s insurance policy likely contains an exclusion stating the policy does not insure against damage to property while it is being worked on, or damage caused by any repairing, adjusting or servicing of the property. The exception to this is a fire or explosion, then it is only for the loss or damage caused by those events.
This also means there is no coverage to repair faulty or improper materials, workmanship or design. The corporation’s insurance policy is not intended to act as a warranty for the work and materials provided by others.
Another situation to consider is injuries that may be caused by a tradesperson’s activities. Someone could be injured because of work that is being performed on your property. If the tradesman or contractor does not have appropriate liability insurance, it is unlikely that the injured party would receive much, if any, compensation.
What about coverage for injuries to workers?
Apart for liability insurance, employees of the strata or condo corporation – or any works hired by the corporation – are required to have valid workers’ compensation coverage. The corporation’s insurance policy will not provide coverage as a substitute for appropriate workers’ compensation coverage, which is something the hired contractor and their employees must carry.
The strata or condo corporation’s liability policy would respond to a loss for injury to hired contractors and the contractor’s employees only if the injury occurs because of the corporation’s negligence. Should the contractor file a suit against the corporation, the corporation’s policy will cover the defense costs incurred with respect to the corporation.
How do I make sure a contractor has insurance?
Your contractor or tradesperson should be able to provide you with a Certificate of Insurance, which they can obtain from their insurance broker. This document lists the insurance coverage they have in place. Ideally, they will have at least $2 million in liability coverage.
Disclaimer: This bulletin is intended to provide readers with general information only and is not a confirmation of coverage. Readers are urged not to rely simply on the content of this bulletin, but to refer to their policy wordings and consult with appropriate professionals on a case-by-case basis.