Insurance Requirements for Construction: Builder's Risk, CGL, Professional Liability, Workers' Compensation, and Certificates of Insurance

The types of insurance required during construction, who provides each, how the A201-2017 insurance exhibit works, the architect's limited role regarding insurance, and key exam-tested distinctions.

ARE · Construction & Evaluation

Overview

Construction projects require multiple insurance policies from different parties. The contractor carries commercial general liability (CGL), automobile liability, and workers' compensation. The owner typically carries builder's risk (property insurance covering the work in progress) and may carry loss of use insurance. The architect carries professional liability (errors and omissions) insurance.

In A201-2017, the insurance provisions were reorganized. Article 11 was significantly shortened, and the detailed insurance requirements were moved into a separate insurance and bonds exhibit attached to the owner-contractor agreement (A101 or A133). This exhibit-based format gives the parties flexibility to tailor coverage to the project's specific needs without modifying the general conditions.

A critical exam point: the architect is NOT qualified to evaluate insurance certificates, recommend coverage levels, or approve insurance policies. A503-2017 (the Guide for Supplementary Conditions) explicitly warns that the architect's professional liability insurance may not cover providing insurance advice. Insurance matters should be handled by the owner's insurance counselor.

The architect's role in insurance is limited to including the appropriate insurance requirements in the contract documents and advising the owner to consult their insurance advisor. The architect does not verify the adequacy of coverage, approve certificates of insurance, or recommend specific insurance products.

Under A201-2017, if the owner fails to purchase and maintain the required insurance, the contractor has the right to delay commencement of work. If the owner fails to maintain coverage during construction, the owner waives all rights against the contractor and subcontractors to the extent the loss would have been covered. The owner must notify the contractor within three business days of an impending cancellation or expiration of a required policy, or the contractor may stop work.

Essential

Understanding construction insurance on the ARE means knowing five things: what each policy covers, who provides it, who is protected, what triggers a claim, and the architect's role (or lack of one). Contractor's Insurance Commercial General Liability (CGL): CGL covers bodily injury and property damage caused by the contractor's operations. It also covers completed operations (claims arising after the project is finished). Under A201-2017, the contractor must name the owner, architect, and architect's consultants as additional insureds on the CGL policy. This additional insured status extends the policy's protection to those parties for claims arising from the contractor's work. CGL does NOT cover the contractor's own work product. If the contractor installs defective concrete, CGL does not pay to redo the concrete. It pays for damage that the defective concrete caused to other property or persons.

Professional

An architect is working on a $22M mixed-use project. During a construction site visit, a fire breaks out in a partially completed area, destroying two floors of installed finishes and structural framing. The contractor's superintendent calls the architect asking who should file the insurance claim. The architect correctly advises the superintendent to contact the owner, since builder's risk is the owner's insurance policy covering the work in progress. The contractor's CGL policy does not cover damage to the contractor's own work in place; it covers bodily injury and property damage to third parties. The owner files a builder's risk claim and the insurer covers the cost of replacing the destroyed work, minus the policy deductible. Under A201-2017's waiver of subrogation, the owner's insurer cannot pursue the contractor for the loss even if the fire was caused by the contractor's negligence.

TLDR

Contractor carries: CGL (bodily injury/property damage to third parties), auto liability, workers' comp
Owner carries: Builder's risk (property insurance for work in progress), boiler/machinery, loss of use
Architect carries: Professional liability (errors & omissions, claims-made, 1 year minimum after substantial completion per B101-2017)
Additional insured: Contractor's CGL must name Owner, Architect, and Architect's Consultants
Waiver of subrogation: Owner's insurer cannot sue contractor (and vice versa) for covered losses
Owner fails to maintain insurance: Owner waives rights against contractor; contractor can delay commencement or stop work (3 business day notice of cancellation required)
Architect's role: Include insurance requirements in contract documents; do NOT evaluate, approve, or review certificates of insurance
A201-2017 change: Insurance details moved from Article 11 to a separate insurance and bonds exhibit for flexibility
CGL trap: Does NOT cover contractor's own defective work, only damage that defective work causes to others

ELI5

Think of a construction project like a big team sport. Every player wears different protective gear because they face different risks. The contractor wears CGL (Commercial General Liability) insurance. This is like their helmet. If someone gets hurt because of their work, or if they accidentally damage someone else's property, this policy pays for it. But here's the tricky part: if the contractor builds a wall wrong and has to tear it down, their CGL doesn't pay for that. It only pays if that bad wall fell on someone or damaged something else. The contractor also wears workers' compensation, which is like a safety net for their own employees. If a worker gets injured on the job, workers' comp covers their medical bills and lost wages. Every state requires this. The owner wears builder's risk insurance.

AREConstruction & Evaluation

Insurance Requirements for Construction: Builder's Risk, CGL, Professional Liability, Workers' Compensation, and Certificates of Insurance

The types of insurance required during construction, who provides each, how the A201-2017 insurance exhibit works, the architect's limited role regarding insurance, and key exam-tested distinctions.

2 min read275 words

Construction Insurance: Who Carries What and Why the Architect Stays Out of It

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