Insurance Requirements in Contracts 

Presented by Shadi Jalali and Daniel Howell, Alliant Public Entity, at the Public Agency Risk Management Association (PARMA) Conference in Sacramento, California, February 2023

Insurance Requirements in Contracts (IRIC) along with indemnification can be one of the most valuable assets risk managers can contribute to their organization’s risk financing program.  Alliant is pleased to have been invited by the PARMA annual conference to discuss current developments in the IRIC environment and current challenges. 

The IRIC manual was initially developed by public entity risk professionals and consultants over 30 years ago as a resource to public entities. Keeping the manual current is an ongoing effort and Alliant assumed this responsibility as a service to our clients. Shadi Jalali, Daniel Howell and Marcus Beverly edit the manual with the support of Robert Marshburn of CertifiedRiskManagers.com. Each fall the team gathers to review updates to industry forms, recent court decisions interpreting coverage and current developments affecting public entity risk transfer.  Alliant has placed the newest IRIC manual on our website’s Public Entity Education and Pooling group page where it can be accessed as both a .pdf and .docx format so users can easily edit the language for their needs.

Recent developments reviewed at PARMA include:

• The new Insurance Services Office (ISO) Limited Wrap-Up Exclusion form CG 21 31 and why it improves the coverage situation when wrap-up insurance programs are utilized
• The impact of ISO CG 20 38 and CG 20 40 forms relative to coverage provided by subcontractors not in privity of contract with the owner entity
• The differences among the various additional insured forms and editions over time as well as when to use each form
• Whether umbrella and excess liability policies are truly “following form”
• Minimum limits required of contractors considering the higher value of third-party liability and construction defect claims

In addition, the presenters discussed current topics and issues raising IRIC considerations that led to lively discussion with attendees, including:

• Addressing risk in agreements establishing temporary or transitional housing solutions
• Evaluating when to accept course of construction exposure prior to notice of completion and some of the pitfalls to be avoided
• Handling workers’ compensation coverage for out-of-state located employees
• Evolving premises use activities at school sites such as serving as emergency response venues, overnight parking for unhoused groups and other community group uses of school facilities
• Evaluating expanding use of alternative risk transfer and financing schemes utilized by contractors