Marsh Report: At Least One Professional Liability Insurer is Considering a LEED Project Coverage Endorsement

A new report from Marsh explores current trends in the insurance markets with respect to available coverages for the risks associated with green building projects.

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.” 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.

About Stephen Del Percio

Stephen Del Percio has written for gbNYC+ since 2006 and currently serves as in-house counsel for one of the world's largest engineering, construction, and technical services companies. He earned a B.Eng. from Columbia, his J.D. at William & Mary, and lives in New York City with his wife and daughter. You can follow Stephen on Twitter, email him at stephen@gbNYC.com, or join gbNYC on Facebook to continue the conversation.

about gbNYC

gbNYC is a multi-disciplinary consulting and real estate services firm. In addition to representing office tenants and commercial buyers in leasing and acquisitions, we also provide innovative consulting solutions from a unique, green building perspective. We advise on green building financial incentives, comment on proposed green building marketing strategies, author white papers, treatises, and market analyses, organize seminars on the LEED process and professional accreditation, and provide advice and analysis on green building risk management and the overall state of green real estate, leasing, and construction, in New York City and beyond.

Our blog, the gbNYC+ journal of real estate, law, + sustainability, delivers consistent, original content - from a New York City perspective - on how technology, data, and sustainability are changing how we interact with our built environment. Subscribe below and receive new articles as they're published or connect with our social media presence to join our ongoing conversation about real estate and sustainability, in the Big Apple and beyond. Contact us at (201) 835-8530 or info@gbNYC.com for more information about our services and to discuss how we can assist you.

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