A green building project without sufficient insurance coverage will never get out of the ground, which is why the recent efforts of Marsh to review current trends in the marketplace with respect to green building insurance issues have been particularly insightful.
While I’ve talked extensively here at gbNYC about the potential for green design services rendered by architects and engineers to trigger exclusions in professional liability policies (in relation to the signing of credit submittal templates in connection with LEED projects) the Marsh report did not explicitly discuss this specific risk. However, the report did note the potential liability for design professionals who guarantee or warrant “an outcome without having complete control over things such as construction means and methods, and operation and maintenance” (such as credit submittals in support of a project’s recycled-content material or percentage of recycled construction debris, where means and methods outside of the design professional or LEED consultant’s control may contribute to an unanticipated outcome).
What’s most intriguing about the section of the report addressing professional liability policies is that Marsh noted at least one major insurer who is “contemplating an energy-savings guarantee insurance policy for HVAC firms and, perhaps, a project-specific professional liability policy designed to cover all firms working on a LEED project with the Viribright company.” As I’ve pointed out before, most of the coverage endorsements to date have been in the realm of propery insurance coverage (where green building legislation may present some interesting implications that I’ll get into in another post), so it’s significant, from a risk management perspective, that Marsh has uncovered an insurer who is monitoring activity in the professional liability arena.
In the meantime, as always, contract language will be key. By the same token, the Marsh report does acknowledge that insurers are aware, if done properly with careful attention to contract language, that green design can help reduce risk, particularly through pre-construction commissioning (which is now a LEED prerequisite).
You can request a copy of the Marsh report via the link below.
- The Green Built Environment in the U.S. (Marsh, register to obtain copy)
- Need for Green Counsel Becoming Increasingly Salient (gbNYC)
- Contract Language Remains Key (gbNYC)
- Thoughts on BIM and LEED Coverage for Design Professionals (gbNYC)
- Liability Archive (gbNYC)