When a Construction Insurance Exhibit Lands on Your Design Contract

Short answer

Insurance requirements in an architect contract are often written for general contractors, not design firms. Owners reuse one exhibit across every agreement, so you may see builder’s risk, pollution liability or additional insured status on professional liability. Sort each line into what fits, what costs more and what your policies cannot support. Then take the gaps to the owner, with your attorney handling the contract language.

Why insurance requirements in an architect contract look like a builder’s

Owners and their risk managers work with contractors far more often than with designers. Their standard exhibit protects against construction risk, such as site injuries, property damage and the building itself.

A design firm’s main risk is a professional error. Professional liability covers that exposure, and it works differently from the policies in a contractor’s exhibit.

What design-specific requirements usually look like

Published standard agreements offer a useful benchmark. The AIA’s owner-architect agreements, discussed in the AIA B503 guide to amendments, list general liability, auto, workers’ compensation, employer’s liability and professional liability, with blanks for the limits. They place additional insured status on general liability and auto, not on professional liability. They also contemplate that the owner pays for coverage beyond what the architect normally carries.

Many public owners follow a similar pattern. The NJEDA architect insurance requirements exhibit and Georgia Tech Facilities’ design professional requirements are two public examples.

How to sort the exhibit line by line

Requirements that fit your work. General liability, auto, workers’ compensation and professional liability at reasonable limits.
Requirements that fit but cost more. Higher limits, a longer professional liability maintenance period or a project-specific policy. These are often possible, but they add premium.
Requirements that do not fit. Coverage for construction work you do not perform, or wording a policy cannot support, such as additional insured on professional liability.

How to respond to the owner

Ask whether the owner has a design professional version of its exhibit. Many do.
For items that cost more, ask whether the owner will pay the added premium.
For items that do not fit, explain briefly why and offer what you carry.
Have your attorney handle the contract language, and have your agent confirm what is possible.

Example: the six-page exhibit

A five-person architecture firm receives an owner’s contract with an exhibit that lists builder’s risk, pollution liability, an installation floater and a $10 million umbrella. It also asks for additional insured status on every policy.

The firm sorts each line with its agent. General liability, auto and workers’ compensation already fit. The umbrella limit would cost more, and the firm asks whether the owner will cover the premium. Builder’s risk, the floater and additional insured on professional liability do not fit, so the firm explains why and offers its current coverage. The owner supplies a design professional exhibit.

This example is hypothetical. Coverage and owner responses vary, and coverage depends on the policy terms and underwriting.

Why you should not sign what you cannot deliver

If you agree to insurance you do not carry, you make a contract promise your policies may not keep. That can lead to a breach-of-contract dispute, and the resulting claim may not be covered. Your attorney can advise on the legal side of that risk.

What to check

Does the exhibit match your actual services, or was it written for a contractor?
Which requirements do your current policies already meet?
Which ones would raise your premium, and will the owner pay for them?
Does anything require wording your policy cannot support?
Has your attorney reviewed any proposed changes to the contract?

Do I need builder’s risk as a designer?

Usually not. It insures the building under construction, which is typically the owner’s or contractor’s responsibility. Check your contract and ask your agent.

Will the owner really change the exhibit?

Often, when the request is specific and polite. Experienced owners know the difference between contractor and design requirements.