Consider Amending Your Construction Contract In Response To Change In Insurance Policies

ConsensusDOCS suggest solution to change in insurance policies


The organization responsible for boilerplate language in most insurance policies has made some changes that probably affect your construction contract. Luckily, the good people at ConsensusDOCS have made us all aware of these changes and they have suggested new contract language to deal with the changes.


ConsensusDOCS is a leading construction contract template producer. In my opinion, their agreements are preferable to the standard forms produced by the American Institute of Architects (AIA). ConsensusDOCS is comprised of a number of construction industry players, including builders, designers, managers and attorneys.


So, when ACORD (The Association of Cooperative Operations and Research Development) changed the language in their standard insurance forms, ConsensusDOCS proposed some contract changes. ACORD has altered the language controlling Certificates of Insurance, the document relied upon by many contractors and owners to ensure that contractors and subcontractors have adequate insurance while they are on the job.


According to the new language, it may be nearly impossible to find an insurer that will provide a certificate holder with the previously standard thirty (30) day notice of cancellation of insurance. If this is the case, contractors and owners have no way of being assured that the third party insurer will let them know, with advance notice, that their contractor or subcontractor’s insurance will be terminated.

ConsensusDOCS has suggested new language, in order to contractually bind the contractor to maintain insurance throughout the contract and to get notice of non-renewal or termination from the third party insurer. The language appears to alleviate much of the risk associated with the ACORD changes, but I would also ensure that the clause is tied to your termination or stop order rights, so that you can be certain to prevent uninsured losses while remediating the insurance lapse.


If you are using a construction contract that requires your contracting partner’s insurer to provide 30 days notice of cancellation, please consult with your attorney to update your forms and to seek addenda to your outstanding agreements.




ConsensusDOCS has approached the problem by

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