Few, if any, housing cooperatives are self-sustaining entities. You need to rely on vendors and other businesses to supply your members with certain necessities, such as cable hookups and snow removal. However, what happens if a vendor or contractor causes harm? Who’s liable for damages?

Ensuring vendors are adequately insured

You may think you can rely on a vendor’s liability insurance to protect the financial health of your co-op in the event something goes wrong. However, some vendors may not carry adequate insurance coverage. This can leave the housing co-op holding the bag once the limits of the vendor’s policy have been reached.

Housing co-ops can help protect themselves from liability by demanding a certificate of insurance. A certificate of insurance verifies that a vendor has adequate coverage and that the policy is up to date. This is a useful tool for determining how shielded your co-op is from liability should something go wrong.

The limits of an insurance certificate

It’s important to keep in mind that an insurance certificate is meant for informational purposes only. The issuance of a certificate does not create a contractual relationship between the housing co-op and the insurance provider. Additional policy exclusions and limitations not outlined in the certificate may also apply. Discussing your concerns with a professional can help provide you with a more definite sense of your liability protection.

Don’t enter into an agreement you’re not comfortable with

If you’re uncomfortable with a vendor’s insurance policy, you can request a higher minimum of liability coverage. If a vendor refuses to honor your request or seems reluctant to provide you with a certificate of insurance, you may wish to rethink your business relationship.

You should always take steps to protect your housing co-op before agreeing to a contract. Doing so can help protect you from potentially costly legal battles.