The higher-tier party (the hypothetical owner) may object to this approach because of the risk of relying on the lower-tier party for notice—when the likely reason for having to provide the notice is the fact that the lower-tier contractor has failed to pay its insurance premium.

But perhaps the higher-tier party can require the lower-tier party to provide new and updated certificates of insurance on a monthly basis—perhaps with payment applications—to confirm that the insurance remains in place. Even if there is a cancellation without prior notice, the period that could be subject to the lapse of coverage would be relatively short and contained.

If the higher-tier party refuses to enter into a “no-cost” change order to address the changes in the ACORD certificate, the lower-tier party may provide notice to the higher-tier party that its refusal to accept notification from the lower-tier party is a “force majeure” event, should the lower-tier party be able to show that its inability to comply with the contractual requirements arises from actions beyond its control.

It is important to consider that both parties might try improving their abilities to track the dates on which policies expire. Third-party vendors can help with this task.

The risk of cancellation of a policy may not be the largest risk that a higher-tier party faces. The greater risk to an owner may be that its general contractor fails to assure that its subcontractors continue to provide new certificates of insurance after the coverage period reflected in the certificate of insurance provided when the subcontracts originally commenced. A renewed sense of vigilance to confirm that the insurance actually does remain in place for the duration of a project may be a favorable benefit of issues raised by the new ACORD forms.

Sean H. Brogan is an attorney and producer with The Graham Co.; A. Peter Prinsen is vice president and general counsel with The Graham Co., and Richard H. Lowe is a partner with Duane Morris LLP in Philadelphia.