Key changes to the American Institute of Architects documents

Date published

10/04/2018

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Every 10 years, the American Institute of Architects (AIA) revises its fleet of documents which are used for most commercial construction projects in the United States. The changes reflect current trends and are the result of extensive input from liaison groups in the design and construction industry.

This article explains a few key differences in the new documents, especially those affecting insurance coverage. There is an 18-month period before the old documents are retired, which expires on 31 October 2018.

Insurance and Bond Exhibit

One of the most significant changes is the new Insurance and Bonds Exhibit A (the Exhibit) to the Owner-Contractor A101, A102 and A103 Agreement forms. Due to changes in the insurance market and products, the AIA thought it was important to create a document that could be modified more than every 10 years and to tailor the coverage for a particular project. The exhibit allows the parties to negotiate insurance minimums and limits.

Within the new Exhibit is a provision for Insurance For Existing Structures, which was created to reflect the industry change of an increased amount of remodelling of existing structures or constructing additions to existing structures. Previously the documents only required insurance for new construction. The owner must now purchase all-risks property insurance protecting the existing structure against the same causes of loss to which the builder’s risk policy would respond (i.e. fire).

The Exhibit uses a tick box approach to make the document more “user friendly” and to allow the parties to think about the amounts of coverage for specific liability limits/sub-limits and other coverage options, if not already specified.

Contractors are required to carry commercial general liability insurance with several types of claims that cannot be excluded if a contractor’s work involves that type of work: roofing, residential, exterior insulation finish systems (EIFS), earth movement, and XCU (explosion, collapse and underground).

Contractors must provide the following to complete the Exhibit: Commercial Liability Limits, Automobile liability limits and Employer’s Liability. These are required if the contractor’s work involves professional services, transport or use of pollutants and maritime/aviation risks.

Owners are still required to provide builder’s risk property coverage that covers the value of the construction. There are prohibited exclusions for fire, explosion, theft, vandalism, malicious mischief, collapse, earthquake, flood or windstorm. Coverage must be provided for ensuing loss for contractor or design error.

There are optional property coverages for the parties to discuss. These are standard, relatively common coverage extensions that are appended to the builder’s risk or property policies:

  • Loss of use, business interruption, delay in completion
  • Ordinance or law insurance
  • Expediting cost insurance
  • Extra expense insurance
  • Civil authority insurance
  • Ingress/egress insurance
  • Soft costs insurance.

For additional insured coverage, the AIA wants the parties to use the 2004 ISO form for loss “caused in whole or in part” by the acts or omissions of the named insured. However, for those states with anti-indemnity laws that restrict additional insured coverage, the 2013 ISO form - which narrows additional insured coverage as permitted by law - would be the appropriate form. For contractors, there is a waiver of subrogation provision so if there is contractor error, the damage is covered by the owner’s property coverage policy and the owner’s property carrier cannot pursue the contractor for coverage.

Electronic Notice and Building Information Modeling (BIM)

The parties are now required to use AIA’s BIM and digital data exhibit E203-2013 to govern the development, use and transmission of digital data. The new A201 recognizes the importance of emails. If the parties want to use email as written notice for general notice, that can be established in the E203 digital protocol exhibit. Notices of claim for additional time or money cannot be submitted via email and must still be made in writing via certified mail or courier with proof of delivery.

A201 provides that the contractor’s reliance on BIM will be at its “sole risk and without liability of any other party” unless the parties use E203 and G202 documents. This is a major source of risk for the contractor and contractors should consider modifying this language.

Sustainable Projects Exhibit – E204

The AIA has created one exhibit E204 to replace what were previously separate versions of all of its documents for sustainable projects. It will be incorporated into the owner-architect and owner-contractor agreements. It can be updated and is used to establish a clear owner’s sustainable objective and to address the risks and responsibilities associated with sustainable design and construction services.

Comment

Incorporation of insurance provisions for remodeling existing structures rather than just new construction, electronic notice via email, reflecting today’s digital communications and the creation of new documents specifically focused on sustainable projects are just some examples of the current trends in this constantly evolving industry.

The full extent of the changes, which cover many more areas than those highlighted above, are available at www.aiacontracts.org/learn.

Read other items in the Construction and Engineering Brief - April 2018