August 16, 2017

Understanding Insurance Requirement Changes to The AIA Contract

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The documents produced by The American Institute of Architects (AIA) are the most widely used standard form contracts in the construction industry, according to the AIA of Louisiana. These AIA contracts facilitate communications among all the parties involved in construction, which makes it easier to produce a high quality project in a timely and economical fashion.

Not only is it convenient to use the AIA contracts and documents already provided by the AIA, but they are also fair, reflect industry practices, reflect changing construction practices, are flexible, and, perhaps most importantly, are easy to understand.

While the benefits of AIA contracts are numerous, it can be problematic for those in the construction industry when the insurance requirements in the contracts change. In this blog post, we’ll examine a new requirement that is key to consider when using AIA contracts for construction work.

Changes To A201 General Conditions of the AIA Contract for Construction

The AIA publishes new versions of their documents every 10 years in order to keep up with the changing industry trends and technology advancements. JD Supra reported that earlier this year, the AIA released its latest versions of 11 forms, with an additional 18 revised versions to follow this fall. And once all 2017 updates are released, the 2007 forms will only be available for another 18 months.

JD Supra also noted that one of the most popular documents produced by the AIA is the A201 General Conditions of the AIA Contract for Construction, which is approximately 35 pages in length, filled with general conditions to many of the agreements between the owner and contractor. While most of the modifications to the document are minor, the AIA made material changes to the insurance provisions, which is especially important to consider as it relates to insurance tracking and compliance.

Insurance and Bond Exhibit

Those in construction or those working with the construction contracts need to be aware that the AIA added an Insurance and Bond Exhibit (the “Exhibit”). What’s the purposes of this Exhibit? It’s intended to provide the parties with flexibility in developing insurance requirements, and to allow the parties to easily convey insurance obligations to their insurance agents. The AIA also made substantive updates in the Exhibit, which are critical to review.

What’s the bottom line? 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.

How Do The AIA Contract Changes Impact Your Organization?

To summarize JD Supra’s comments, 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, then your organization needs to be aware that there is a danger of the contractor becoming liable to the owner, architect, and/or architect’s consultants for any gaps in coverage.

Ensure Your Organization Is Adequately Covered

Nuances like keeping up with changing AIA contracts can be confusing! That’s why insurance tracking services like myCOI exist—to help you handle the everyday tasks of managing certificates of insurance and protecting your company against underinsured claims, costly litigation and failed audits. The software is an easy-to-use, cloud-based solution developed and supported by a team of insurance professionals and is built on a foundation of insurance industry logic to automate the COI communication process and ensure you remain protected.

Ready to Learn More About AIA Contract Changes?

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