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What happens when a shareholder hires a contractor and presents the appropriate insurance requirements but six months later it is uncovered the required policies where voided day before work began?
There's a difference between expiry and cancellation.
If the coverage expired before the anticipated completion date, it is up to the shareholder as much as managing agent to make sure the coverage is renewed before the expiration date. Otherwise all work must be halted until valid coverage is reinstated.
If the coverage was cancelled or voided by the contractor before or during the job without notifying the shareholder or the MA, there is probably fraud and the contractor needs to be reported to whichever City agency licenses contractors. Neither shareholders nor managing agents are notified of a change in coverage status, so it is not a lapse on the part of either party.
If the coverage was voided and then there was a subsequent claim, the shareholder, co-op, and managing agent probably have a good defense. Each should hire their own attorney.
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Normally in a situation like this, we ask for two things in the alteration application for board / management review.
1) The length of time of the proposed alterations
2) The certificates of insurance of the contractors involved
If the project started late, the management company should have reviewed the C of I prior to work starting to ensure that there would be no lapse in coverage during the estimated time of completion.
If the project started on time but their insurance was set to lapse shortly thereafter, management should have requested the updated Certificate prior to allowing them to continue the day after their certificate expired.
Keeping track of these insurance policies is a very important aspect of the management position and if allowed to expire, they create a potential liability and insurance issue for any damage or injury that is sustained.
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Board Talk members who registered prior to March 9th, 2016 will need to reset their password.