Risk Transfer

“Risk Transfer” means making contractors who work for you responsible for their own negligence and mistakes. For example, if you hire an installer to setup a manufactured home for your customer and a faulty installation results in damage to the house or injury to its occupants, you not only want the installer to fix the problem, you want them to protect you. Examples of independent contractors hired by community managers and retail centers include installers, transporters, a/c suppliers, electricians, tree trimmers, plumbers, landscapers, road maintenance companies, and home foundation companies.

Ensure that your contractors take care of you by putting yourself in a legally strong position. Here’s how to do it. First, make sure that you use written contracts with all of your contractors. Contracts should say what you expect the contractor to do for you and should require the contractor to both defend and indemnify you in the event a demand is made by a third party due to the contractor’s work. Second, require that all contractors provide you with a “Certificate of Insurance” that names you as an additional insured on their general liability insurance policy. Third, keep a file for all contractors that work for you that includes the contract and certificate of insurance for at least five years after the contractor ceases working for you. In the long run, these business practices will save you a bundle of time and effort.