Although there are other construction forms in use, the American Institute of Architects (“AIA”) forms continue to be the most prevalent for vertical construction projects in the United States. The AIA commonly updates its documents every ten years and 2017 is no exception: this year, the AIA updates include five of its Owner-Contractor Agreements and the General Conditions (A201) used with those forms. Although many of the changes are subtle, the manner in which insurance is handled are significantly different.
Under the “old” forms, the parties inserted insurance requirements into the body of the Agreement, but this method proved awkward as insurance coverage tended to become more complex, and owners (and their consultants) began to tailor requirements for specific projects not contemplated by the forms and often relegated the technical insurance details to risk management professionals. Also, the AIA Agreements and the A201 General Conditions did not always complement each other, prompting some owners to created their own insurance exhibits with requirements furnished by their risk managers, insurance carriers, or consultants.
Recognizing the evolution of insurance practices, the new AIA forms contain a separate Insurance Exhibit, and there is more clarity and continuity between the Exhibit and the A201 General Conditions. The Insurance Exhibit contains requirements for specific coverages and has blanks into which limits are populated. Overall, the new AIA Agreements give the parties more direction than did the old forms.
In some ways, the Insurance Exhibit offers too large a variety of options, many of which will not apply to a given project. One must take great care to check off and/or eliminate some of the options. Although the AIA has attempted to provide an exhibit that is more comprehensive and helpful, it still may not meet the parties’ needs, and there is nothing to prevent the parties from creating their own exhibit, making sure, however, that it does not conflict with the language in the A201 or, if it does, to adjust the A201 accordingly.
There is no one way to address insurance, although adhering to the practice of separating the requirements from the body of the Agreement is a good idea. Many owners with multiple projects may want to create their own form of exhibit, structuring it so that changes can be made on a project-by-project basis. The attorneys at Saul Ewing Arnstein & Lehr commonly work with owners and their insurance consultants on these matters, and we would be happy to review your insurance requirements or help prepare a bespoke form exhibit to use with the new AIA documents.