New AIA Contract Documents Change Insurance Requirements
While other industry forms are now competing, the AIA Contract Documents remain the most used contract and construction-administration forms in the construction industry. In order to keep pace with industry trends, the AIA publishes revisions to these forms every 10 years. Earlier this year, the AIA released its latest versions of 11 forms, with an additional 18 revised versions to follow this fall. Once all 2017 updates are released, the 2007 forms will only be available for another 18 months.
One of AIA's flagship forms is the A201 General Conditions of the Contract for Construction – roughly 35 pages of general conditions to many of the agreements between the owner and contractor. While most of the modifications to the A201 General Conditions are relatively minor, the AIA made material changes to the insurance provisions.
In lieu of placing the insurance requirements in Article 11 of the A201 General Conditions, the AIA added an Insurance and Bond Exhibit (the "Exhibit"). The addition of the Exhibit is intended, in part, to provide the parties with flexibility in developing insurance requirements, and to allow the parties to easily convey insurance obligations to their insurance agents. Importantly, however, the AIA also made substantive updates in the Exhibit.
Previous editions of the AIA forms required contractors to name the owner, architect, and architect's consultants as additional insureds on their liability insurance policies. However, the Exhibit now expressly requires the contractor to name these parties as additional insureds with coverage not less than the coverage on specific insurance endorsements (i.e., ISO endorsements CG 20 10 07 04, CG 20 37 07 04, or CG 20 32 07 04). If the contractor's insurance policy does not include the coverage provided in these endorsements, or if the policy includes additional exclusions to these standard endorsements — as many do — there is a danger of the contractor becoming liable to the owner, architect, and/or architect's consultants for any gaps in coverage.
Like most construction contracts, the AIA Contract Documents can be complex, and have significant consequences. Clark Hill's Construction Practice Group is here to assist when negotiating and interpreting these provisions. If you have any questions, or would like assistance, please contact Scott Garbo at 313.965.8654 | firstname.lastname@example.org, Zachary Rowley at 313.965.8262 | email@example.com, or another member of Clark Hill's Construction Law Team.
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