Your HOA's vendor relationships are one of its biggest financial and legal exposures. The landscaping crew maintains your common areas every week. The plumber responds to emergencies in occupied buildings. The electrician works in shared electrical panels. If any of these contractors cause property damage or injure a worker or resident, your HOA could be sued directly if the vendor was not properly insured.
This guide covers how to vet vendors before hiring them, what insurance minimums to require, how to run a competitive bid process, and how to manage ongoing contracts so certificate renewals do not slip through the cracks.
This is the part boards most frequently underestimate. When a contractor works on HOA property and:
...the HOA is a potential defendant if the contractor does not carry adequate insurance. The contractor's insurer pays first. If there is no insurance, or if coverage is exhausted, plaintiff attorneys look for other deep pockets. Your HOA's general liability policy and your D&O policy are the next targets.
Real scenario: A landscaping crew employee slips off a ladder while trimming trees in the common area. He suffers a broken arm and three weeks of lost wages. His medical bills are $18,000. If the landscaping company carries workers' compensation and general liability insurance, their insurer handles the claim. If they do not, the injured worker's attorney will name the HOA in the lawsuit. Defense costs alone can exceed $40,000 before any judgment.
The fix is simple: require proof of insurance before any vendor sets foot on your property, and verify it annually. This is not bureaucracy for its own sake; it is basic risk management.
A Certificate of Insurance (COI) is a one-page document issued by the vendor's insurer that summarizes their coverage. It is not the policy itself; it is a snapshot of the coverage that was in effect on the date it was issued. Request a new COI annually and any time a policy renews.
Standard requirements for HOA vendors:
| Coverage Type | Minimum Recommended Limit | Required For |
|---|---|---|
| Commercial General Liability (CGL) | $1,000,000 per occurrence / $2,000,000 aggregate | All vendors |
| Workers' Compensation | Statutory minimum for your state | All vendors with employees |
| Auto Liability | $1,000,000 combined single limit | Vendors who drive vehicles on property |
| Umbrella / Excess Liability | $1,000,000 minimum | Major contractors (roofing, construction, paving) |
| Professional Liability / E&O | $500,000 minimum | Engineers, architects, property managers |
For large capital projects (roof replacement, repaving, significant structural work), increase your general liability minimum to $2,000,000 per occurrence and require the umbrella policy. The additional coverage is almost never a deal-breaker for legitimate contractors and meaningfully reduces your exposure on high-value work.
Requiring a COI is good. Requiring that the HOA be named as an Additional Insured on the vendor's policy is better. When the HOA is listed as an additional insured, the vendor's insurance policy extends coverage to the HOA for claims arising from the vendor's work. This means the vendor's insurer defends the HOA and pays claims, rather than your own insurance carrier having to pick up the loss.
Ask vendors to add "The [Community Name] Homeowners Association, its board members, officers, and agents" as an additional insured. Most commercial insurance policies allow this at no extra cost to the vendor. A vendor who refuses is a red flag.
Before adding a vendor to your approved list, run through this checklist:
Most states license contractors in regulated trades: electrical, plumbing, HVAC, roofing, general contracting. License lookups are free through your state's contractor licensing board website. Confirm the license is active, is in the correct trade category, and matches the company name on the contract. An expired license voids most insurance policies and is grounds for contract termination.
Request a current COI and verify three things:
For large projects, call the insurer directly (the number is on the COI) and verify the policy is active. COIs can be forged; a 2-minute phone call confirms the coverage is real.
Ask for two or three references from HOA or commercial clients, not residential customers. HOA work is different from residential work: the vendor is dealing with a board of volunteers, multiple stakeholders, and work performed in and around occupied units. An HOA reference tells you whether the vendor can navigate that environment.
When calling references, ask: Did the vendor complete work on time and on budget? Were there any disputes and how were they resolved? Would you hire them again? The last question is the most revealing.
Google the company name and check for Better Business Bureau complaints, Yelp reviews, and any court judgments. Search "[Vendor Name] complaints" and "[Vendor Name] lawsuit." This takes five minutes and occasionally reveals a pattern of problems that no reference would volunteer.
For any project above your board's single-decision threshold (commonly $1,000 to $3,000; check your governing documents), get at least three written bids. This is not just good practice; many HOA governing documents require it above certain thresholds.
Bids are only comparable if all bidders are pricing the same scope. Write a brief scope of work document that describes:
Send the same scope document to all bidders. When bids come back, compare them line by line. A 30% spread between the lowest and highest bid is normal; a 60% spread usually means someone misunderstood the scope or is cutting corners on materials.
The lowest bid is the right choice only if the vendor is equally qualified, equally insured, and proposing equivalent materials. A bid that is 25% below the field usually reflects one of three things: lower-quality materials, a less experienced crew, or a plan to make up margin on change orders. Ask low bidders to walk you through their assumptions before awarding.
Change order discipline: Establish a policy before work starts: no change order is valid unless it is in writing, signed by both the vendor and an authorized board officer. Verbal "while you're at it" additions are how project costs balloon by 40% beyond the bid price. A legitimate vendor will agree to this in writing.
A typical HOA of 40 to 80 units works with 8 to 15 vendors: landscaping, pool service, common area cleaning, pest control, HVAC maintenance, elevator service, gate maintenance, general handyman, plumbing, electrical, snow removal, trash, and possibly a management consultant. Each of these has a contract with different terms, renewal dates, and notice requirements.
Every vendor contract should be stored in one place accessible to all board members. Not in a board member's personal email. Not in a binder on someone's kitchen counter. A shared digital folder (your HOA management platform, or at minimum Google Drive or Dropbox) with a consistent naming convention: "[VendorName]_Contract_[StartDate].pdf".
For every active contract, record:
Missing an auto-renewal date is one of the most common and expensive HOA mistakes. A landscaping contract that auto-renews for another year at $2,400/month because nobody sent a cancellation notice 60 days before renewal locks the HOA into $28,800 of spending they may no longer want. Put renewal deadlines on a shared calendar with a 90-day advance reminder.
Insurance certificates expire annually. Licenses expire on various cycles. If a vendor's COI lapses and they are still working on your property, you have the same exposure as if you never checked their insurance in the first place.
Build a simple tracking system. At minimum, maintain a spreadsheet with columns for: vendor name, service category, COI expiration, license expiration, and date last verified. Set calendar reminders 45 days before each expiration to request updated documents.
If a vendor's certificate lapses and they cannot provide a current COI within 5 business days, suspend their work until they do. This is not a punitive policy; it is a condition of the contract. Any legitimate vendor has their COI renewal under control; the ones who cannot produce it are the ones whose coverage may actually be lapsed.
In AffordableHOA: The vendor management module stores vendor contacts, attached documents (COIs, licenses, contracts), and expiration dates. The board receives automated alerts before certificates expire, so compliance tracking does not depend on anyone remembering to check a spreadsheet.
Even well-vetted vendors sometimes underperform. Having a clear process for addressing this prevents disputes from escalating and preserves the relationship when remediation is possible.
Before raising a performance issue, collect your evidence: photos, dates, a list of specific deficiencies versus the contracted scope. "The landscaping looks bad" is an opinion. "The hedges were not trimmed on the 3rd and 17th as specified in the contract; photos attached" is a documented breach.
Send a written notice (email is sufficient) identifying the specific deficiency, the contracted standard that was not met, and the expected corrective action and timeline. This creates a paper trail and often resolves the issue faster than a phone conversation because the vendor understands you are tracking it formally.
Most service contracts have a termination-for-cause provision that allows cancellation with shorter notice than the standard termination clause if the vendor has materially breached the agreement. Review your contract before taking any termination action. If the contract is silent on this, your HOA attorney can advise on your state's default rules for service contract termination.
Board members should not vote to award contracts to vendors in which they have a financial interest (ownership, employment, or family relationship). This is required by fiduciary duty law in most states and is an easy lawsuit target if ignored.
Adopt a written conflict of interest policy that requires board members to disclose any relationship with a bidding vendor before the award decision, and to recuse themselves from the vote if a relationship exists. Document the disclosure and recusal in the meeting minutes.
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