The American Institute of Architects (AIA) recently released the 2017 edition of its frequently used design-bid-build standard contract documents, including the widely used General Conditions of the Contract for Construction, the A201 form. As many construction attorneys and their contractor clients, this form is the basis for many commercial construction contracts. There appear to be a number of changes, but as recently reported by International Risk Management Institute, Inc., (IRMI) Construction Risk Manager, there are a number of insurance-related changes that include the following:
- The insurance and bond requirements are moved from Article 11 to an exhibit, Exhibit A, and are much more detailed than in prior editions. These requirements include provisions for specifying required limits of overage for unique or specialty coverages including professional and pollution liability, manned or unmanned aircraft liability, maritime and railroad protective liability and asbestos abatement liability.
- Additionally, particular types of restrictions on the contractor’s liability coverages that have been seen often in previous policies are expressly forbidden including:
- Insured versus insured exclusions;
- Removal of the subcontractor exception to the damage to you work exclusion
- Prior work and prior injury exclusions;
- Bodily injury exclusion (other than injury to an employee of the insured);
- Removal of contractually assumed liability for injury to an employee of the insured;
- Residential or habitational exclusions if the work called for in the contract is to be performed on a residential, multifamily, or other habitational project;
- Roofing exclusion if the work involves roofing;
- Exterior insulation finish systems (EIFS) exclusion if the work called for in the contract involves such systems;
- Subsistence or earth movement exclusions where the work involves such hazards;
- Explosion, collapse or underground property hazard exclusion where the work involves such hazards.
Review of this new policy form is ongoing by construction and risk management industry groups, such as IRMI. This change in the standard form does seem to be a pushback effort by the construction industry side of the equation against the insurance industry side in an attempt to regain coverages. In recent years, the now-prohibited exclusions are among those used by a number of insurers to reduce exposure to construction defect claims and third-party actions. It is anticipated there may be an upswing in coverage litigation as this new form and its interaction with contractors’ liability policies are tested.
The author, Erin B. Moore, Esquire, is a shareholder at Green & Green, Lawyers whose practice regularly includes litigating construction defect claims as well as insurance coverage issues. If you have questions in these areas, Green & Green has the experience and skill to assist.