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What liability do vendors pose to my company?

Connor Doyle PCAM, AMS, CMCA

There's a lot that goes into training a new Community Association Manager, since there's so many things we expect our CAMs to be responsible for. But usually, on the first day, a supervisor will tell them something along these lines: "Stick to the contract." The service agreement between a management company and an association is a sacred document. And any company worth its salt will do everything I can to make sure it doesn't fall afoul of that agreement.  

Vendor Management is one of the core responsibilities enshrined in every contract, though it's not always spelled out exactly what that entails. But ask a risk management expert, and they'll probably advise you to either collect or have evidence of the following:  

  • A Vendor Agreement, which includes a hold harmless provision  
  • A service agreement
  • W9
  • General Liability Policy
  • Worker's Compensation Coverage
  • Commercial Automobile insurance if they'll ever drive onto property
  • Both association and management company named as additionally insured on all insurance policies
  • Current Trade Licenses when applicable

Those are just some of the basics; the list can get longer. Yet most management companies would be hard-pressed to state conclusively that they have current Certificates of Insurance for all of their vendors, not to mention the rest.  

Does not having all of this information mean your company is in breach of contract with your clients?  

It’s a complicated question to answer. But management companies have been sued for breach of contract and/or fiduciary duty in the past, and failure to properly enforce vendor compliance standards can be seen in that light. Furthermore, even if your company doesn’t face a direct liability in the event of an accident, your associations certainly do, which means you could lose accounts or brand equity.

The responsible course of action is to ensure that your company has in place strict vendor compliance policies and enforces them without fail. But it's not a simple task. You need people who understand the stakes, are detail-oriented, and have the time to hunt down insurance carriers for hundreds of COIs every year. The costs add up, quickly, and it can be hard to justify that many man-hours going toward a pursuit that doesn't have an attached revenue source.  

Or, you can hire VIVE, and have them do that work for you. All at no cost to your company.  

We'd love to talk to you about how we can help your company address the risks it faces, and turn what is so often a weakness within our industry into a strength you can advertise to clients.  

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