A major errors and omissions coverage issue facing architects and engineers is that once their job is finished, a green building or green project largely is out of their hands and they must rely on others to implement their plans.
With green construction, “you’ve just got another layer of complexity to the design process,” said Dan Knise, president and CEO of Ames & Gough, a McLean, Va.-based insurance broker and risk management consulting firm.
“It’s a very challenging time” for architects, said Laura Guagliardo. Naperville, Ill.-based senior claims counsel, design professionals, professional liability at Travelers Bond & Financial Products, a unit of the Travelers Cos. Inc.
“They need to be up on their game on what’s out there, what’s good and bad about various systems and products that are out there,” Ms. Guagliardo said. “Generally, as prime designers, they have to make sure the people they bring in,” including structural and mechanical engineers, “are also up on their game.”
A major cornerstone of green construction is energy efficiency. This can involve computer-controlled heating, ventilation and air conditioning systems. An architect may design it properly, but if the people who use it are improperly trained and it does not work, the architect can be sued, Mr. Knise said.
Materials raise other potential liabilities, Ms. Guagliardo said. “Each element of the building is something that needs to be considered, and it needs to be considered in various (geographical) areas. That’s what the design professional does,” she said. “It’s dealing with all these different things that’s the challenge” for them.
Homer Sandridge, Hunt Valley, Md.-based vp of professional liability at Travelers Bond & Financial Products, said using materials and systems that have not been around as long as the “tried and true” raises issues about how long they will last. “I think the biggest challenge to an architect is helping clients make these right trade-offs, and it’s not easy.”
He said mechanical, heating and electrical engineers are “just as much in the mix as architects” when it comes to potential liability in green construction.
“It doesn’t do any good to have a building that has an extremely low energy usage because of design, and then install a traditional heating system that’s way too big,” Mr. Sandridge said. “The structure must allow the heating system to be a totally different one.”
Mr. Knise said one growing area of the green building business is “commissioning,” where architects and engineers fine-tune the system and train building managers in using it or where an outside firm does so. But this also risks “creating a whole new area of liability” for the architect and the commissioning firm, he said.
In addition, Mr. Knise said, architects should be leery of guaranteeing that a building will receive a specific certification under the Washington-based U.S. Green Building Council’s Leadership in Energy and Environmental Design certification program. This is problematic because architects “don’t control a lot of the factors” as to whether a building becomes LEED-certified, including issues such as waste disposal.
Shari Shapiro, an associate with law firm Cozen O’Connor P.C. in Cherry Hill, N.J., said, “You want to have a solid contract, where you’re not overpromising the attributes of your services. If you’re a design professional, for example, you want to make sure that the standard of care is that of a reasonable architect.”
Lori Bailey, Boston-based head of professional liability for Zurich North America Commercial, a unit of Zurich Financial Services Group, said architects E&O coverage for green buildings “is generally considered low-frequency, high-severity line,” with high severity especially true for large firms.
“It tends to be a very costly claim” involving issues that include improper design, contract mismanagement and improper coordination, perhaps because they deal with large structures “that tend to have a large price tag,” said Ms. Bailey.
Claims also increase in a poor economy, she said. For instance, a situation could arise in which an architect and engineering firm are not paid by a client and then sue for payment, only to face a counterclaim that they were not paid because the work was poorly done, she said.
But there are steps architects can take to minimize claims, say experts. Carefully review the contracts, making sure to read the indemnification provisions and the limits of liability, Ms. Bailey said.
Architects should avoid making guarantees “that systems will only use a certain amount of power” or last a certain period of time, said Mr. Sandridge.
“Be cautious about the use of new, untried construction materials,” said Mr. Knise. Some architects and engineers require their clients to sign a statement, “You told me to use this material that’s never been used before,” to make certain they limit their potential liability, he said.
Ongoing educational programs for architects and engineers as well as keeping their employees up to date on new techniques, products and best practices is another way to avoid potential liability, Ms. Bailey said.
Paul Ablan, Minnetonka, Minn.-based senior vp and managing director of professional liability at OneBeacon Professional Insurance, a unit of Hamilton, Bermuda-based OneBeacon Insurance Group Ltd., said design firms “have to be consistently aware of the changes” to certification requirements—not only those established by third-party organizations, such as the U.S. Green Building Council’s, but those in various state or local jurisdictions concerning sustainable design for projects.
In addition, “we have several federal regulations that are now in place that set minimum limits of sustainable design for projects,” Mr. Ablan said.
