New Project-Based IPD Insurance

By: Daniel M. Drewry

One of the early concerns with Integrated Project Delivery (IPD) dealt with how to obtain insurance on an IPD project.  The standard insurance products, whether it be Commercial General Liability, Errors and Omissions, etc., were structured around well-defined roles of designers and contractors, fully vetted and tested standard industry contract forms, and, generally speaking, a fault-based environment of risk allocation.  With IPD, the owner, contractor and designer operate in a contractually created and enforced no-fault, collaborative environment typified by gain-share/pain-share arrangements.  New industry form contracts have been released from ConsensusDOCS and the AIA to try and standardize the new risk allocation on an IPD project.  Some of these contractual arrangements create a new, single purpose entity for carrying out the project (e.g. the AIA C-195), others are simply tripartite (e.g. ConsensusDOCS).  However, the new industry forms remain just that – new.  They have not been tested by the courts or in arbitration.  This has left many insurers slow (and cautious) to respond to taking on this new type of risk.  Early policies had to be written on a project by project basis and were costly.

In September 2010, however, Victor O. Schinnerer & Company, Inc. and CNA rolled out a new project-based IPD insurance program.  The new IPD policy will be project-based and is intended to respond to third party design claims on behalf of the project, in place of the individual policies of either the single-purpose entity (envisioned by the AIA C195, Standard Form Single Purpose Entity for Integrated Project Delivery) or the lead designer, general contractor and sub consultants.  The policy has specific limitations in terms of the types of projects on which it is available and to whom.  Also, the underwriting is still very much project-specific.  Nevertheless, this policy represents yet another step by the industry towards acceptance of the collaborative movement in construction so often discussed in connection with IPD and Building Information Modeling.  For more information and details on the IPD policy, see: http://www.schinnerer.com/risk-mgmt/Gdlns/Pages/Gdlns-4-2010-IPD-insurance.aspx; http://www.theaiatrust.com/newsletter/2010/10/ipd-insurance/

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Daniel M. Drewry

Daniel M. Drewry

Daniel M. Drewry

About This Blog

The DSV Construction Law Blog is hosted by Daniel M. Drewry. Dan is a Partner with the law firm Drewry Simmons Vornehm, LLP and concentrates his practice in the areas of Construction Law and Litigation, and Labor & Employment Law.

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