V.B. from New Haven County, Connecticut writes:
Dear Mister Condo,
We were recently told by our Manager that any workman on the property that does not have a license doing work inside or outside of the condo and sues the association for anything, that the condo insurance is primary and homeowners is secondary. This does not sound correct since the association should not be responsible for the actions of others who do not obey the rules. Thank you. Await your guidance.
Mister Condo replies:
V.B., unlicensed or uninsured contractors are generally forbidden to perform work on association grounds as outlined in the association’s documents. Most association by-laws are clear on this and for good reason. Any unlicensed or uninsured contractor who gets hurt or damaged on association property is likely to sue everyone involved, including the association. Homeowner’s insurance generally protects homeowners from damages incurred inside their home, whether a friend trips on a rug or a contractor injures himself while remodeling a bathroom. A true accident is just that and most HO-6 policies (homeowner’s insurance in CT) provide some type of coverage for injuries sustained inside a unit. However, in the case of a contractor injured while performing work, it is possible that an injury would result in a lawsuit where the association was also named as a defendant. That is just an unfortunate reality of our overly litigious society. The association is not responsible for the actions of others; they are responsible for protecting the association’s assets, in this case the association’s cash reserve.
As far as which insurance pays first or second it is really a question of how the lawsuit is presented. If an uninsured or unlicensed contractor were hired by a homeowner without the association’s knowledge or approval, it is very unlikely that the association would be at fault. However, in order to protect all owners within the association proper insurance is maintained in the event of a lawsuit. After the legal proceedings were over I would expect the association to then sue the homeowner for violating the association’s governing documents and hiring an uninsured or unlicensed contractor. The insurance makes the association strong. Proper procedure makes the association whole after the event. Hope that helps.