Masonry Magazine August 1999 Page. 44
AIA,s A201 form
General contractors and specialty contractors alike appear to be giving in to "the way it has always been done." But a subcontractor need not agree to add the general contractor as additional insured just because the general contractor did so for the owner. Owners usually have less jobsite presence and create fewer problems that result in claims than do general contractors, who are responsible for jobsite coordination and safety. General contractors often are involved in directing the means and methods of construction by subcontractors, self-perform portions of the work, and can interfere with the work of subcontractors, thereby creating problems for subs. A subcontractor naming the general contractor as additional insured simply because the general contractor named the owner additional insured is not the natural equalization of risk that general contractors usually assert it is. In this situation, the subcontractor's general liability policy is placed at greater risk than the general contractor's policy.
Other changes in Article 11 of the A201 give the owner the option to require the contractor to provide Project Management Protective Liability (PMPL) insurance as primary coverage for the owner's, contractor's and architect's vicarious liability arising out of "construction operations." The PMPL policy is modeled after the Owners and Contractors Protective Liability (OCP) coverage form (CG-00-09) and has an identical insuring clause. Many contractors and subcontractors offer the OCP in lieu of indemnity and additional insured as an effective way to protect their general liability policies while insuring the up-tier entities for vicarious liability and failure to supervise.
The PMPL policy significantly differs from the OCP by including coverage for the work of subcontractors performed on behalf of the general contractor and by including coverage for an architect, engineer or any organization acting on the insured's (owner's) behalf in connection with the "general supervision" of the contractor's operations for a designated project. The duty to defend an insured is specifically identified in the Insuring Agreement.
The definition of "general supervision" in the PMPL policy is broad because it includes all activity except preparing designs or taking over the means and methods of the "named contractor's operations," or in the case of the "named contractor," taking charge of the means and methods of the subcontractor's operations.
This new policy form (PMPL) is intended to perform as though all subcontractors, acting as one, procured a master OCP policy naming the owner, architect, engineer, general contractor and construction manager as insureds. The policy will be primary and non-contributory with respect to subcontractors' CGL policies as to vicarious liability and general supervision. Coverage will include the failure to identify and cause the correction of unsafe jobsite conditions created by subcontractors. The cost of the PMPL policy is currently priced below one percent of the cost of construction for $1 million limits.
The A201 indemnity provision in Paragraph 3.18.1 is modified so that the indemnity does not operate when claims are covered by the PMPL insurance. The apparent intent of these changes is to substitute the coverage provided in the PMPL policy for the indemnity obligations of the contractor and for additional insured status on the contractor's liability policy. It is important to note that the prohibition of requests for additional insured applies even when the option to procure PMPL insurance is not exercised by the owner. Although the A201 (1997ed.) gives the owner the option to require and then pay for the procurement of PMPL insurance, the general contractor may independently elect to, without regard to the owner's election, procure PMPL to provide protection for liability arising from the operations of subcontractors.
In addition to the indemnity change described above, the A201 changes provide that the contractor's indemnity does not apply to loss of use. This is consistent with another major change in the A201: elimination of liability for consequential damages. The indemnity provision has also been significantly narrowed to include claims or damages "only to the extent caused by the negligence, acts or omissions" of the contractor. The language "in whole or in part" contained in the 1987 version of the document has been deleted. The contractor's indemnity for the liability of the architect contained in Article 3.18.3 of the 1987 version has been deleted. The "flow-down" provisions in the A201 mentioned above will apply these changes to the general contractor-subcontractor relationship.
When the contractor procures a PMPL policy, the owner, contractor and architect waive all rights and claims against one another to the extent coverage is provided by the