Real Estate Insurance

00:00 [Music]
00:13 my name is Jason sky Johnno and I’m
00:16 president of Lovett first associates in
00:18 Tarrytown New York I wanted to talk
00:21 about a topic today that a number of
00:24 boards of condominiums and coops are
00:26 unaware and it’s a topic that can
00:29 drastically affect their liability
00:31 exposure and ultimately their insurance
00:33 premiums for many years to come if it’s
00:35 not properly addressed the topic is
00:38 related to a law and New York State
00:41 called the New York State scaffold law
00:42 New York is the only state in the United
00:45 States of America that has this type of
00:47 law and basically the law says that if a
00:51 worker for instance for a contractor
00:53 working at the condo or co-op building
00:56 is injured particularly in a fall from a
00:59 height like a ladder or a tree or a roof
01:02 that the building will be absolutely
01:04 liable for that contractor’s injuries in
01:07 a court of law under a liability suit so
01:10 obviously the law has huge implications
01:13 and risks for buildings many boards are
01:16 under the assumption mistakenly that if
01:19 the board or the managing agent collects
01:22 a document called a certificate of
01:25 liability insurance and if that document
01:28 lists in the description box that the
01:33 building and the managing agent and
01:35 board are additional insurance on the
01:38 contractors general liability policy the
01:41 board assumes that they’ve got
01:42 protection and that one of the
01:44 contractors workers is injured that the
01:46 board in the building will be protected
01:49 by the contractors insurance policy
01:51 because this thing says their additional
01:53 insured in fact if you read the words
01:57 that are highlighted at the very top of
01:58 this document they say this certificate
02:01 is not worth anything it transfers no
02:04 rights no protection to the additional
02:07 insurance and it specifically says that
02:10 if the certificate holder is an
02:12 additional insured
02:13 the policies of the contractor must be
02:16 endorsed well what does that mean
02:18 endorsed most contractors general
02:22 liability policies have what’s called an
02:25 additional insured endorsement that
02:28 states that the contractor is allowed to
02:31 name anyone that the contractor wishes
02:34 as an additional insured any entity any
02:36 building any person as an additional
02:38 insured as long as the contractor agrees
02:41 to do that in a written agreement before
02:44 the work is started and before the
02:46 accident happens
02:47 that’s called a blanket additional
02:49 insured we’re required by written
02:50 contract endorsement such as this so the
02:54 thing is this certificate of insurance
02:56 is absolutely not
02:59 a written agreement a written agreement
03:01 states the parties and is also signed by
03:04 the parties to the agreement so in order
03:08 for a board and a building to be an
03:11 additional insured on a contractor’s
03:13 general liability policy in addition to
03:16 the certificate of insurance you need an
03:19 agreement two pieces of paper working
03:21 together the agreement which your
03:24 attorney should really write up in
03:26 review before it’s used it needs to
03:28 state a few things the contractor’s name
03:30 the type of work to be done the client
03:33 or the building the location of the
03:36 building and usually the managing agent
03:38 you’ll want to name is additionally
03:39 insured as well along with the board of
03:40 directors the agreement should state
03:43 that the contractor agrees to indemnify
03:46 and hold harmless the building the board
03:49 in the managing agent and that also the
03:52 contractor agrees to name all of those
03:55 parties as an additional insured on its
03:58 general liability policy the contractor
04:01 should also maintain workers
04:02 compensation in this agreement requires
04:04 that as well because a contractor such
04:06 as a sole proprietor working without
04:08 workers compensation adds even more risk
04:11 and liability to the building so with
04:13 these terms the contractor signs the
04:15 agreement and then the managing agent
04:17 can sign the agreement on behalf of the
04:19 managing agent and the building that
04:21 that he or she represents and now you
04:24 have a written agreement this agreement
04:26 does
04:26 have to be a separate agreement it can
04:28 be embedded into the contract for work
04:30 along with how much the works good at
04:33 cost and what with the scope of the
04:36 works going to be or can be separate but
04:38 there needs to be an agreement as the
04:41 endorsement states so now that you know
04:44 what’s required to be an additional
04:46 insured you might think well that sounds
04:49 pretty easy the fact of the matter is
04:50 most boards rely on their managing
04:53 agents to collect this type of
04:54 documentation and the problem with that
04:57 is if you have a typical managing agent
05:01 and in some cases these numbers are
05:03 actually understated but let’s say a
05:05 managing agent manages 40 buildings
05:07 let’s say and this wouldn’t be unusual
05:09 25 different contractors service that
05:12 building service one building plumber
05:15 roofer electrician brick pointing guy
05:20 masonry guy painter etc 25 contractors
05:24 and I already explained you need at
05:27 least two documents could be if the
05:30 additional or if the workers comp roof
05:32 is on a separate piece could be three
05:34 documents but let’s say two times 40
05:37 buildings times 25 contractors that’s
05:38 2,000 documents that that managing agent
05:41 needs to maintain for the 40 buildings
05:43 that his firm is or her firm is agent
05:47 for that’s a lot of documents and well a
05:51 lot of managing agents say that they do
05:53 this process well the fact of the matter
05:55 is it’s a very difficult process to do
05:58 well and completely all of the time
06:00 especially if you’re getting
06:02 certificates of insurance for each and
06:05 every policy or because the policy
06:06 renews each and every year and then you
06:08 should have a certificate of insurance
06:10 updated to show the current policies
06:12 enforce for each and every contractor so
06:16 the point of this discussion is that
06:19 boards may not be aware of the exposure
06:23 by not getting these documents in place
06:26 properly these are called risk transfer
06:28 documents and the risk in not doing this
06:31 properly
06:32 however small it is it’s a risk and it
06:35 can be severe is that if a contractor’s
06:37 employee is injured it
06:40 building and falling off of a ladder for
06:42 instance and is unable to work for the
06:45 rest of his life or her life he’s gonna
06:48 sue and because of the scaffold law
06:50 which is unique to the New York that
06:52 worker will win that lawsuit even if
06:55 he’s drunk
06:56 even if he’s been affected by drugs even
06:59 if he forgot all of his safety equipment
07:01 and broke all of the rules the building
07:03 will still be absolutely liable under
07:05 this law the only way to protect is
07:08 either the building’s insurance which if
07:11 the building’s insurance has to pay that
07:12 claim premiums are going to go through
07:14 the roof for the next five years the
07:15 quality of insurance the building will
07:17 be able to go get will go down or
07:20 ideally the contractors insurance and
07:22 the only way you get the contractors
07:24 insurance is making sure he has the
07:26 insurance with the certificate and
07:28 making sure you’re an additional insured
07:30 through the agreement I discussed
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