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Construction Insurance Bulletin

When Do Contractors Become Design Professionals? Does your insurance company know?

By July 1, 2014No Comments

Great news! You won the contract to build that new project. You’ve seen to the details, like sending certificates of insurance to the owner that meet their workers’ compensation and general liability requirements. And now, you begin gathering submittals, shop drawings and change orders. What’s missing?

Have you ever considered the engineering, value engineering or design aspects of these documents? General liability excludes these critical services from coverage. Let’s delve into these grey areas.

Any time you vary from the architect’s or engineer’s drawing, you are technically redesigning the project. Obviously, many changes are minor and inconsequential to the overall building strength and endurance. But many seemingly minor changes do corrupt the building systems.

Suppose you can’t find a specific light fixture and substitute a slightly less efficient one. You probably just violated the newest energy codes. Since energy code compliance is design driven, you may have inadvertently stumbled into a professional liability claim.

When the architect gets sued for the compliance issue, he’s going to prove his design was scrapped and point to you. This claim becomes a grey area. Did you fail to complete your operation correctly, or did you redesign the energy usage for the building? Most of the former, some of the latter is correct.

Do you build or use pre-fabricated components? Roofing structure comes immediately to mind. Does the manufacturer submit drawings for the structural design? Do you endorse them?

Does your company do any construction management, even as an expediting process? How about value engineering?

When you submit change orders, do you suggest better design or function elements in your request?

These actions reflect professional consulting, design or engineering. Errors might be treated as professional liability claims.

There is an element of design and value engineering in every decision. Where the grey ends is a difficult line to draw. Be aware of this issue.

Suppose you use a high-early concrete mix so you can get steel up quicker. Do the long-term setting qualities change the structural integrity? Memorialize this question in a memo to the project architect or engineer; let them decide.

If you do actively engage in consulting, value engineering or design work, purchase professional liability coverage regardless of project insurance requirements.