The Relationship Between Contractors and Good Insurance

Published on: April 26, 2001

A recent trial court decision has caused a great deal of concern among managers and attorneys who have learned about it. As you will see in the discussion which follows, this case poignantly points out the importance of ensuring that contractors have adequate insurance and that associations, additionally, carry adequate liability insurance.

The relevant facts of the case are relatively simple. A condominium association contracted with a painting contractor to have the exterior of their building painted. The particular wall being painted on the day of the accident was some 31 feet high. To reach this height the two workers put a ladder on top of a scaffold platform which had been erected. One worker remained on the platform holding the ladder while the other worked above. Apparently, the scaffolding was not tied to or otherwise affixed to the building. As you might expect, the whole thing toppled over throwing both workers to the pavement below. Both workers were seriously injured.

Suit was brought against both the employer and the condominium association. Of course, the association’s defense was that they had hired an independent contractor and thus had no liability. The workers countered by relying on a relatively obscure statute embodied in the State’s statute setting up the system of inspecting buildings (M.G.L. c. 143) Section 51 of which provides in relevant part that, “… the owner … of a building shall comply with the … state building code and such person shall be liable to any person injured for all damages caused by a violation of any said provision…” The state building code, among other things, requires the provision of a safe workplace and safe working conditions (780 Code Mass. Regs. §3000.6; 454 Code Mass. Regs. §10.03(1)(a) and (b)). Thus, they argued that these provisions created strict liability on the part of the association as it was, effectively, the owner of the building and a safe working place had not been provided.

Much of the legal argument in the case centered on whether the statute was meant to apply to a condominium building.  The statute in full applies to “The owner, mortgagee in possession or occupant, as the person in control, of a place of assembly, theater, special hall, public hall, factory, workshop, manufacturing, establishment or building …” Within that context, our Courts have held that the law doesn’t apply to single family homes. Thus, the association argued that the statute shouldn’t apply to a condominium as it is more akin to a single family home then the list of buildings in the statute. Of course, the workers argued the opposite.

Likewise, there was extensive argument over whether the statute created strict liability, or merely could be used as evidence of negligence. This is significant as it lessens a plaintiff’s burden of proof.

The trial judge ruled against the association’s motion to dismiss and let the case go to the jury. The jury returned a significant verdict against both the contractor and the association. The judge subsequently reversed herself, ruling for the association. The case is now on appeal. Thus, the question of whether and to what extent the statute applies to condominiums is left unsettled. (Only appellate level decisions establish precedent). What then is the lesson to be learned?

First, it is critical to make sure that any contractor doing work on the premises for the association has adequate insurance. This can only be accomplished by using a comprehensive contract mandating levels of insurance and requiring proof of the same. This alone is not, however, sufficient. Rather, the comprehensive contract must contain an indemnity clause under which the contractor agrees to indemnify and hold the association harmless upon any claim arising in connection with the work. Further, as an additional safeguard, the association should be named as an insured on the contractor’s liability policy for the project. Lastly, as an additional safeguard, the association must maintain its own liability insurance at adequate levels. Many associations maintain but the $1,000,000 mandated by their documents. This, I suggest is inadequate. Umbrella policies of an additional $2 – $4 million can be cheaply obtained. The added protection is a must.