Construction Defect, General Liability, green building
As was discussed in a previous blog posting entitled “Green Building Risk Management Obstacles”, there are many potential risks involved in the emerging field of green building. Current insurance policy forms may not provide adequate coverage for all green building risks at this time.
To follow is a summary of the types of policies that are needed:
General Liability: Current General Liability forms may adequately cover claims for negligence resulting in bodily injury and property damage.
Bonding: Current License And Permit Bonds may provide limited protection against the risk that the project will not be completed per state and local code requirements. Surety Bond forms may adequately protect against the risk that the job will not be completed per the plans and specifications or due to financial problems of the contractor.
Professional Liability (Errors & Omissions): Professional Liability insurance is needed to protect against pure economic damages (not associated with bodily injury and property damage) in the event that the green goals are not accomplished resulting in financial loss to the buyer in terms of increased annual operations expenses, lack of savings, or loss of resale value. This type of Professional Liability form for green contractors is not widely available in the market and as a result a specialist insurance agent should be approached for placement.
Source: Green Building: New Benefits For Society And New Challenges For Risk Management; Insurance Journal, November 17, 2008; Vol. 86, No. 22; by Kenneth C. Gibbs
Uncategorized
Theodore L. Senet, a noted Los Angeles construction and insurance attorney, recently listed nine risk management issues dealing with green construction:
1. Compliance with developing green building codes and local requirements
2. Compliance with contract requirements related to certification levels
3. Compliance with contract requirements related to energy savings and operational performance
4. Obtaining tax incentives or meeting tax credit requirements
5. Meeting investment criteria and financing requirements
6. Additional time and costs related to the design, approval and fabrication of new building products and systems
7 The ability of new green products and systems to perform to traditional performance standards
8. The sequencing, constructability and commissioning of new systems, products and processes
9. Compliance with project schedules and the impact on fast track projects
Source: Green Building: New Benefits For Society And New Challenges For Risk Management; Insurance Journal, November 17, 2008; Vol. 86, No. 22; by Kenneth C. Gibbs
Construction Defect, General Liability
“Green certification is a way to gain third-party, independent, and international recognition that a project produces less waste, conserves water and energy, supports the health of its occupants, stamps a smaller carbon footprint, and possesses socially responsible, warm, and fuzzy benefits.”
The risks of green building include:
* The use of newer and untested building systems and products. Who is to say that a new product won’t be the next EIFS nightmare?
* The energy savings may incorporate more insulation and a “tighter” building which may restrict air flow resulting in condensation and mold issues.
* Living roofs with sod and plants may leak and the additional weight may place more stress on the building structure.
* Owners or tenants may not see expected energy cost savings.
