San Francisco Apartment Association

Maintenance Q & A

Be Diligent About Your Contractor’s Insurance

by Various Authors

Q. If a vendor says she has insurance, does that mean she can work on multifamily units? Should I get insurance certificates from this vendor working on my building? What should I look for to keep my building protected?
A. You are wise to ask for proof of insurance from any contractor; the vague claim that she “has insurance” will not do. At our property management firm, we insist that our contractors provide written proof that they carry two types of insurance: workers’ compensation and liability coverage. In most cases, workers’ compensation coverage is a legal requirement. Though liability coverage is not required by law, we demand it for economic reasons. We recommend that you require all your contractors to give you a certificate of liability coverage before allowing them to begin work on your property.

Workers’ compensation insurance covers employees for work-related injuries. If your contractor has even one part-time employee, she is required by law to have this coverage. Failure to have this insurance exposes the employer to civil law suits and liability beyond what she/he would have had with coverage.

A contractor’s failure to carry workers’ compensation insurance can affect you, the owner, in two ways. First, if you carry workers’ compensation insurance and are subject to a routine audit by your carrier and then cannot show evidence of your contractor’s independent policy, your insurer may charge you an additional premium. Your carrier will simply include any payments made to the contractor during the audit period as wages you have paid and charge you based on those costs. Second, you may find yourself responsible for a contractor’s failure to have workers’ compensation coverage under a number of legal theories, including California Labor Code Section 2810.

Liability insurance will cover financial liability arising from personal injury or property damage caused by your contractor. We recommend that you not only verify that she has this coverage but that she has sufficient coverage limits. Whether coverage limits are high enough depends on the size of the job, the likelihood of something going wrong and how bad the damage will be if something does go wrong. For small jobs a limit of $1 million is usually sufficient. For a really large job where the risk is truly catastrophic, a $10 million policy might not be enough.

There are details about a certificate of insurance that you need to know. You should insist your contractor provide you with a certificate that shows you and any other owners, as well as your property management company, as additional insureds on the policy. The indication of additional insurance means that if you are sued because of something done by the contractor, the contractor’s insurer will be responsible for the cost of defending you, as well as paying out any monetary damages. You should make sure that your contractor agrees that her insurance, not yours, is the primary coverage. The policy should provide you with a 30-day prior-written notice of policy cancellation. The certificate must show that the contractor’s coverage is current and will last through the end of the job. The certificate should be in your hands before any work is done or, better yet, before you pay a deposit on the contract.

Although this paperwork seems burdensome, and some contractors will complain about it, I assure you it is common practice and deliverable within hours by reputable contractors. Again, in a nutshell make sure you: (1) obtain written proof of both workers’ compensation and liability coverage; (2) verify that the liability limits are adequate for the job and make sure the certificate names you as an additional insured; (3) get the contractor’s agreement that her liability coverage is primary; and (4) review the certificates for the provision of a 30-day advance notice of cancellation. Your diligence about this will really pay off if something goes wrong.
– Merrie Turner Lightner

Q. There are so many different regulations regarding periodic fire sprinkler certification in apartment buildings. I’m confused. Could you clarify the subject?
A. According to California Health and Safety Code Title 19, fire sprinklers and standpipes must be thoroughly serviced every five years. This service includes an inspection of every sprinkler head to ensure that none of them have been painted or tampered with. Also included, among other things, are water flow calibrations and Fire Department Connection Check Valve actuations. Once the service is completed and has passed an inspection, a California State Fire Marshal tag will be affixed to the system. Title 19 also mandates a quarterly sprinkler inspection. This inspection can be done every three months by the building owner or the owner’s agent. We have found, however, that few owners have the expertise to properly perform this inspection. We recommend you have it done by a qualified sprinkler contractor.

Some insurance companies also require a yearly water flow of the sprinkler systems. Check with your insurance company for specific requirements.
– Scott Mazzarella


The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of SFAA or the San Francisco Apartment Magazine. Consult the advice of a specialist for any specific problem. Merrie Turner Lightner is with Lightner Property Group, 415-267-2900. Scott Mazzarella is with Mazzy’s Fire Protection, 415-665-5553. Copyright © 2004 by the San Francisco Apartment Magazine. All rights reserved.