There has been a flurry of activity in the insurance world relating to a change in the Certificate of Liability Insurance form. ACORD (Association of Cooperative Operations Research and Development), the company that creates insurance forms, amended the Certificate of Liability form to minimize insurers’ obligation to provide notice of insurance cancelation or expiration. This change in the form may also require you to change your contracts.
Prior to this change, cancellation provisions required insurers to send notification of cancellation to the owner or general contractor within a certain number of days. The new wording provides as follows:
SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS.
So, if the policy does not require notice of cancelation, the insurer will not provide it.
This new language may also require you to change your contracts. ConsensusDocs has changed their series 200 language. The Consensus contracts originally required the Certificate of Insurance to state that notice would be provided in the event of cancelation or expiration. Consensus updated the provision to track the new language in the Certificate of Insurance–that notice must only provide notice if that language is commercially available. And, now that the Certificate of Liability form will not contain the notice language, the insurer is now relieved of this obligation. Not too surprisingly, the new Consensus language now requires the constructor provide notice to the owner upon actual or constructive knowledge of cancellation or expiration.
Ultimately, you should review your contracts to see whether you are still supposed to provide a Certificate of Insurance that requires your insurer to notify the owner or general that your policy is about to or has expired. If your contracts still have this language, you will need to update them.
If you need some help updating your construction contracts, please give me a call.