The May/June issue of eco-structure magazine offers an excellent article on insurance industry perspectives towards green building and the potential risks that design professionals may unwittingly encounter on green projects. Written by Chicago-based Gary Kingery, a design professional liability underwriter for architects and engineers, the article starts out by noting that insurers have little understanding about green building and its associated rating systems, mostly because of the paucity of green-related insurance claims to date.
Professional liability insurance refers to coverage that a licensed professional- doctor, lawyer, engineer, or architect- purchases to guard against errors and omissions that the professional may commit as he or she renders services to clients. Kingery first notes that he’s unaware of any insurers offering insurance products to professionals in connection with green building, but comments on the potential for a design professional to trigger an exclusion in his or her policy by signing the submittal templates required by rating systems such as LEED or Green Globes. This possibility exists because the standard exclusion in a professional liability policy states that “this policy does not apply to warranties and guarantees and any claim(s) based upon or arising out of express warranties and guarantees.” Kingery observes that “[t]he templates are very specific and may leave little room for dispute as to their intent to warrant or guarantee if the ‘declare,’ ‘affirm,’ or ‘certify’ language is present.” The scenario that design professionals want to avoid is where their insurer disclaims coverage on the grounds that the design services in dispute were referenced in the submittal template (but affirmed through the certification process by the design professional). Accordingly, Kingery suggests that design professionals insist on language in contracts for professional services clearly indicating that the signing of submittal templates is solely for the satisfaction of the particular rating system credit and does not constitute any warranty or guarantee on behalf of the design professional.
I’ll echo Kingery’s conclusions here- until professional liability insurers design a product specifically geared towards design professionals participating on green projects, engineers and architects must remain vigilant about the risks associated with projects seeking certification under any rating system and seek counsel with respect to negotiating appropriate contract language on such projects.
- Professional Liability (ecostructure, p. 32)