Eco-friendly construction increases professional liability risks

Green InsuranceInsurers and risk managers are facing all new challenges in developing coverage for errors and omissions (E&O) for eco-friendly construction projects, which are similar, but still quite different from the risks associated with typical construction projects.

This has lead to new trends and developments which are affecting purchasers for specialty lines of insurance such as E&O, directors and officers (D&O), cyber risk, employment practices liability, transportation, marine, and surplus.

The reason for the difference between “green” and standard construction project risks is in the materials and technologies that are used, which are comparatively untested and are frequently considered to be experimental. According to experts in the industry, this leaves the potential for unexpected results or groundless expectations.

Though the topic has drawn significant attention recently, the President of the OneBeacon Professional Insurance professional liability group, Paul Ablan, said that “green building sustainable design has been around for decades.”

OneBeacon Professional Insurance is a branch of OneBeacon Insurance Group Ltd., which is a firm based in Bermuda.

According to Ablan, professionals have been seeking more efficient and economical operations for a long time, as they equally wish to address environmental concerns. However, it is only within the last few years that public and government focus has turned toward sustainable design.

Duane Morris L.L.P partner, Edward B. Gentilcore, from Pittsburgh, added that this type of project often receives a great deal of hype, with buzz words thrown around such as energy efficiency, being healthier, or that they are friendlier to the environment. However, the challenge is converting such terms into contractual language so that it can express the reality of the project’s performance.

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