What Kind of Insurance Does My Business Need to Carry?

What Kind of Insurance Does My Business Need to Carry? on vendorsmart.com

Making sure you carry the correct insurance is key to securing contracts with homeowners associations

Figuring out the ins and outs of insurance coverage for your business can be a hassle. There are some complexities based on your business location, size, type of work performed, and more. While you may be tempted to focus on running your business instead of getting your insurance in order, skipping out on the right coverage can cost you valuable clients – namely HOAs.

Vendors who want to make the most of their HOA relationships and be included in the bidding process should be sure to meet HOA requirements for insurance coverage. Laws vary by the state about what types of insurance businesses must carry. Here’s how you can find out what kind of insurance you need to carry to work with an HOA.

Why HOAs expect vendors to have insurance

Most HOAs are required by their by-laws to employ only vendors that have adequate insurance coverage. This is because HOAs have a responsibility to their residents to use community funds in the best interests of the neighborhood – and a vendor lacking insurance coverage opens the HOA up to a lot of unnecessary risks.

If anything happens while vendors are working on the property, without appropriate insurance, the HOA (including individual board members) could be held liable. This can include events such as accidents, lawsuits, and more. Therefore, it is in the best interests of the HOA to only contract with vendors who have insurance to guard against these risks.

Don’t let yourself get pushed out by other bidders just because you don’t have the proper paperwork in place. Even with top-notch work and quality customer service, without the right insurance, any vendor may be put in the “no” pile before they even have a fair chance to compete.   

How to make sure you’ve got the right coverage

First and foremost, seek the advice of legal counsel. Insurance requirements vary by state and industry, and there are many variables that come into play when selecting the best policies for a company. An attorney can make appropriate recommendations and help secure the coverage that’s needed.

As a rule, HOAs will typically want to see some version of these four elements in your policy:

  1. General liability insurance – covers a business in the event of a lawsuit over accidental injury or property damage. Can include coverage for legal fees and judgments.
  2. Workers compensation – covers the costs, such as medical bills or lost wages, associated with employees who are injured on the job. This includes not only the company and its employees but anyone working with the company on the property. If you bring part-time helpers along, they also need to be included in the policy.
  3. Commercial vehicle liability insurance – covers injuries or damage caused by anyone driving a business vehicle.
  4. “Additional insured” provision – This is a commonly requested provision by HOAs, so you should ask your attorney about it when discussing insurance needs. Simply put, an additional insured provision guarantees that the HOA’s legal fees will be covered under your general and commercial vehicle liability policies if a lawsuit occurs.

Set yourself apart by providing your insurance details to HOAs

HOAs are often managed by community volunteers with little time to sort through stacks of vendor applications. If you’ve got the appropriate insurance in place, sending it over to the HOA administrator is a breeze.

Here’s the information you need to include:

  • Policy number
  • Insured name
  • Policy period
  • Insurance company
  • Limits and deductibles
  • Certificate holder identification

In the end, the right coverage for your business can protect you and the HOA from any potential liabilities that can occur when you’re working on a property. Having this information ready at hand will make it a lot easier to quickly score lucrative gigs and start working. VendorSmart is a comprehensive web-based marketplace that connects vendors and community managers in one place. At VendorSmart, we understand that third-party vendor relationships are critical to the success of any association or condo. Our software and team of industry professionals guarantee full compliance vetting for every vendor employed by your management company at no cost to you or the vendor. Want to learn more? Schedule a demo today.