Vendor insurance requirements every property manager should enforce

When a vendor's work hurts someone or damages something on a property you manage, the injured party looks for everyone who might pay. If the vendor isn't properly insured, that search tends to end at the owner and the management company. Setting the same insurance requirements for every vendor, and checking them, costs nothing but discipline.

This is general information, not legal or insurance advice. Set your requirements with your broker and your attorney, and with your management agreement and the owner's policies in mind.

Why it's the manager's problem

You don't own the building, but you direct the work. You don't employ the vendors, but you hire them. Whether a loss stays with the vendor comes down to whether the vendor had the right coverage on the day, whether it names the owner and the manager as additional insureds, and whether you can prove both.

The coverages to require

Commercial general liability

The foundation, for injury to other people and damage to their property: a visitor who trips over equipment, water damage from a plumbing repair. Require it from every vendor. Prefer occurrence policies to claims-made, and check the products and completed operations aggregate, which answers for damage that shows up after the work is done.

Workers' compensation

If a vendor's employee is hurt on the property and the vendor has no workers' comp, the worker may look to the owner. Most states require employers to carry it; enforcing it with your vendors is up to you. Sole owners with no employees are a common gray area. Some can legitimately go without it, and that's a decision to make deliberately and in writing, ideally with your broker.

Commercial auto liability

For vendors who drive on the property, such as snow plows, delivery trucks and landscapers with trailers. Look for "any auto", or the owned, hired and non-owned boxes your agreement requires.

Umbrella or excess liability

For higher-risk work like roofing, structural work, work at height and heavy equipment. An umbrella sits over the general liability and auto limits so that a serious claim doesn't run past them and reach the owner.

Professional liability, when it applies

For vendors who give advice or design, such as architects and engineers. General liability doesn't answer for a design mistake; professional liability does.

Endorsements

Requiring coverage is half of it. The vendor's policy also has to protect the owner and the management company, and that happens through endorsements.

• Additional insured status for the owner and the management company on the vendor's general liability, and often the auto policy. It lets you send a claim to the vendor's insurer. A mention in the certificate's description box isn't the endorsement; ask for the endorsement.
• Primary and noncontributory wording, so the vendor's policy pays first without asking yours to share.
• A waiver of subrogation, so the vendor's insurer can't pursue you to recover what it paid.
• Notice of cancellation. Standard policy conditions notify only the vendor. Ask whether the policy can be endorsed to notify you, and otherwise plan to check dates yourself.

Tiering limits

One limit for every vendor doesn't fit. Window washing on a high-rise and restocking vending machines are different risks. Tier them:

• Lower risk (interior cleaning, light maintenance, landscaping without heavy equipment): standard general liability limits for your market.
• Moderate risk (HVAC, plumbing, electrical, pest control): higher general liability limits, auto and workers' comp.
• Higher risk (roofing, demolition, work at height, cranes and heavy equipment): higher limits again, with an umbrella.

Set the tiers once, in writing and with your broker, and apply them every time. Consistency is what you'll be asked about if a claim arrives and one vendor turns out to have been held to a lower standard.

Checking it

1. Set requirements before hiring, in the vendor contract or work order.
2. Collect the certificate before work begins. No certificate, no access.
3. Check coverages, limits and dates against what you asked for.
4. Confirm additional insured status with the endorsement, not the description box.
5. Make sure the certificate is current. One issued eight months ago says little about today.
6. Record expiry dates and set reminders before each one.
7. Collect again at every renewal. Last year's compliant vendor may have dropped coverage or lowered limits.
8. Keep the documents. If a claim arrives, they're your evidence.

Steps 6 and 7 are where most operations fall down: certificates pile up in email and lapses surface after an incident. TradeGuard reads each certificate's dates and asks vendors for renewals before they arrive. It was built for general contractors and has no properties or units yet; see COI tracking for property managers for what that means in practice.

In short

Require the right coverages, insist on the endorsements, tier limits to the risk and check everything before work begins. Then check again at every renewal.