9/7/2011

Coalition Agrees on a Solution that Addresses Certificates of Insurance Form Change that has Placed Thousands of Contractors Out of Contractual Compliance

Washington, D.C. – ConsensusDOCS® is today publishing contract guidance addressing a new critical insurance issue that impacts construction contracts. ACORD, the licensing company for insurance forms, has amended their certificate of insurance form requirements. Construction contracts typically require at least 30-days advanced notice of insurance cancelation. The change in the certificate of insurance form no longer purports to give 30-days advanced notice of insurance policy cancelation and altering the form may run afoul of state law. Consequently, a contractual notice requirement may not be commercially available and place contractors and subcontractors in violation of their contracts on a national basis. Model contractual guidance language is now available for free in the ConsensusDOCS Guidebook at www.consensusdocs.org/guidebook. ConsensusDOCS is also offering a webinar on October 4th, 2011 at 2pm ET www.consensusdocs.org/webinars which will address this issue and proposed solution in detail.

“The ACORD form change impacting certificates of insurance came out of nowhere and potentially puts contractors, subcontractors, design-builder, and construction managers in breach of their contracts on day 1. The coalition-crafted solution is yet another example how ConsensusDOCS are the only standard contract documents that are updated for today’s design and construction industry,” comments Brian Perlberg, Executive Director for ConsensusDOCS.

ConsensusDOCS was able to draw upon its unique coalition of designers, owners, contractors, subcontractors and sureties (DOCS) to quickly form an expert working group to this national issue and develop a best practice and fair solution vetted by 35 construction organizations. The Guidebook language reflects what is commercially available in today’s construction insurance market, while ensuring Owners receive timely and independent notice. The ConsensusDOCS guidance language seeks efficiencies by allowing electronic insurance notice, as well as a designation of the party in the best position to give appropriate notice (e.g., insurance company or broker). In addition to the insurance company or broker, a party must now also provide prompt insurance cancelation notice to the certificate holder, as that individual may be in the best position to do so.

The ACORD form change impacts all standard contract documents, including the ConsensusDOCS 200 and the AIA A201®, and most manuscripted construction contracts that contractually require insurance policies provide a 30-day advanced notice of cancelation. The ConsensusDOCS notice of cancelation solution references where such language should be inserted into ConsensusDOCS contracts (ConsensusDOCS 200, section 10.2.4). However, the ConsensusDOCS proposed solution applies equally to other contracts that are now out-of-date due to the ACORD change. The free ConsensusDOCS Guidebook is being updated to respond to today’s changing construction marketplace in a timely fashion, and this issue was deemed too pressing to wait until the next revision cycle.

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ConsensusDOCS Media Contacts:

  • Brian Turmail, The Associated General Contractors of America (AGC), 703-837-5310, turmailb@agc.org
  • David Mendes, American Subcontractors Association (ASA), 703-684-3450 x 1335, dmendes@asa-hq.com
  • Kathy Hoffman, National Association of Surety Bond Producers (NASBP), 202-464-1175, khoffman@nasbp.org