Recently I attended an educational seminar discussing how community association managers (and their boards) may choose to use a third party to manage projects that are not part of the manager’s usual day-to-day duties. A construction manager was an example of the type of third-party vendor that might assist in bringing in an additional level of expertise, as well as freeing up the manager to perform their usual duties.

This third-party vendor will be giving advice and making many decisions in the process of managing the (hereto undefined) project – but wait! We already know that our manager is an additional insured under our directors’ and officers’ lability policy for any decisions made, or not made, that might have resulted in a lawsuit. What about this third-party vendor?

This is where professional liability insurance comes in. The decisions and advice given by that third-party contractor need to be covered by their own insurance. If an architect gives you advice on how to build a building, you build it exactly to specifications, and it fails (aka falls down), it is the professional liability insurance of that architect that will step up and handle the ensuing lawsuit. For an attorney, their professional liability insurance is called “malpractice” insurance. For a doctor it is “medical malpractice” insurance. Another common name is an “errors and omissions” liability policy.

Whatever you call it, just like you would be sure a contractor had proper insurance to work on your property, be sure that any professional providing advice or acting on behalf of your community association has their own professional liability policy. Why should your association pay for their bad acts?

Kimberly Lilley is the Director of Business Development for Berg Insurance Agency and may be reached at Kimberly@BergInsurance.com.