CCDC 2 (2020) Stipulated Price Contract Changes—Is Your Construction Insurance Affected?

/ By Cowan Insurance Group

CCDC Documents are familiar industry standards that provide fairness and balance for all parties involved in a construction project. In December 2020, the Canadian Construction Document Committee updated the CCDC 2 (2020) Stipulated Price Contract for the first time since 2008.

If you are unsure how these updates affect your construction insurance, our construction experts can review the following with you:

  • General Liability and Auto Liability limits have increased from the previous $5,000,000 requirement to $10,000,000 under the 2020 version
  • New: Contractors Pollution Insurance coverage with limits of $5,000,000; this is something that many contractors have not accounted for in the past
  • New: Unmanned Aerial Vehicle Liability (i.e. use of drones)

Contact a Cowan construction insurance expert today.

2008 versus 2020 Versions of CCDC 41 – Insurance Requirements

Coverage Item 2008 2020
Builders Risk – Broad Form no less than IBC Form 4042 and 4047 1.1 times the contract value No change 1.1 times contract value
Builders Risk – Deductible
*Contractor/owner can agree to increase
Not exceeding $5,000 Not exceeding $10,000
Boiler and Machinery Broad Form Broad Form – now requires testing and commissioning extension
Contractors Equipment Broad Form No change other than the owner may waive the requirement for Contractors Equipment Insurance
General Liability limit $5,000,000 $10,000,000
General Liability deductible
*Contractor or owner can agree to increase
Not exceeding $5,000 Not exceeding $10,000
Automobile Liability $5,000,000 $10,000,000
Contractor’s Pollution Liability No requirement $5,000,000
Manned Aircraft/Watercraft Liability $5,000,000 $10,000,000
Unmanned Aerial (Drone) Liability No requirement $5,000,000

Additionally, please note the following sections of CCDC 2:

  • Ready for Takeover by the owner has changed; in the past, ‘substantial performance’ was a key factor; now, it permits the owner to take early occupancy for all or part of the work before Ready for Takeover is achieved; in an early occupancy situation, responsibility for that part of the work would be passed on to the owner which would also trigger the start of any applicable warranty
  • Ready for Takeover can include:
    • Achieving “substantial performance” pursuant to the applicable lien legislation
    • Issuance of an occupancy permit
    • Completion of final cleaning and waste removal
    • Delivery of required operations and maintenance documents to the owner
    • Completion and submission or delivery of as-built drawings

In addition to the insurance changes, the following changes to CCDC 2 are critical to take note of, as they may affect construction professionals:

  1. Incorporation of Prompt Payment Legislation.
  2. Change Directives: Costs for Change Directives may only be charged if they contribute directly to implementing the Change Directive. The contractor is no longer able to claim certain items.
  3. Cash allowances: The updated version allows for the reallocation of unspent or remaining cash to cover any shortfalls that may occur in a budget item.
  4. Delays: If there’s a delay due to a stop-work order (issued by a court or other public authority), an extension can be permitted when Ready for Takeover can not be achieved.
  5. Consequential damages: Indemnification has been amended to exclude any liability for “indirect,” “consequential,” “punitive,” or “exemplary” damages.
  6. Safety: Both the owner and contractors must comply with applicable Health and Safety legislation.
  7. Document review: The contractor is now required to report any error, inconsistency, or omission on the contract documents. The prior CCDC 2 version required the contractor to review the contract documents and promptly report any error, inconsistency or omission.
  8. Adjudication: This new condition confirms that nothing in the standard contract affects the owner or contractor’s rights to resolve disputes by adjudication.

Cowan Insurance Group construction experts can help you determine how these changes could impact you.

 

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