The Design Build Insurance Program The Design Build
The Design Build Insurance Program
The Design Build Insurance Program • • • The History of Construction The ARC – Noah goes it alone Tower of Babel lack of communication The coliseum Design Bid Build U S Construction Design Bid Build – Late to the party
Design Build from the Bible • So make yourself an ark of cypress wood; make rooms in it and coat it with pitch inside and out. This is how you are to build it: The ark is to be three hundred cubits long, fifty cubits wide and thirty cubits high. Make a roof for it, leaving below the roof an opening one cubit high all around. Put a door in the side of the ark and make lower, middle and upper decks.
The Design Build Insurance Program • The Spearin Doctrine 1918 – Any design related errors, omissions or deficiencies in the specifications are the responsibility of the owner. – You accept it, you own it or “Speak now or forever hold you peace” – Completed operations coverage is free. – Risk management for the General Contractor
The Design Build Insurance Program • Architects and Engineers 1) Limitations of Liability – contract amount 2) definition of wrongful act/neglengence 3) means and methods 4) create beauty
‘Traditional’ Construction Procurement Notes Owner • General Contractor has no ‘direct’, design responsibility ‘General’ Contractor Engineering Consultant(s) • General Contractor is a recipient of design flow • General Contractor constructs from that flow. ‘Trade’ Subcontractor(s) Architect Direction of Design Information flow • General Contractor may have some ‘attendant’ professional responsibility • This is another seminar! • Scheduling • Permitting • Duty to Warn • Design within sub-contract package
The Design & Build Effect Owner’s Designer (Pre-Contract award) Direction of Design Information flow Potential Novation Architect • Owner benefits from one ‘main’ contract. • Pushing out of Liabilities by Owner. • General Contractor is a recipient of design flow from it’s Consultants. Design & Build Contractor Engineering Consultant(s) Notes • General Contractor has all the ‘direct’, design responsibility except: • Pre-Contract award… Novation? • This is another seminar! ‘Trade’ Subcontractor(s)
The Evolution of the Professional • The Professional – Advise is worth what you paid for it! – Design is an Art. Not just anyone can do it. – Development of Licensing Laws in the Several States. Development of design standards. – Development of Professional Liability Underwriting • We only insure design professionals • No additional insured status – owner has no status • Contractor is not a professional
The Design Build Insurance Program • So what changed and why Design Build? – It builds one team No GC vs Designer finger pointing Offers the Owner a single point of contact Concentrates Design Risk and performance to the Design Builder Offers more options - not limited to one design Reduced term of construction
The Basic Insurance Coverage for Design Build General Liability Builders Risk Professional Liability
The Design Build Insurance Program • • What to look for in the basic blocks 1) Coverage for Design Error 2) Coverage for Faulty Workmanship 3) Coverage for Joint Ventures 4)Contractual Liability Coverage 5) Completed Operations Coverage 6) Additional Insured Status
General Liability Design Enhancements 1) ISO endorsements CG 2279, CG 2280, CG 2243 2) Means and methods 3) Joint ventures – Separate policy with tail Add to practice policy 4) Contractual Liability – Design Liability is excluded from an “insured Contract” 5) Additional Insured – per form and not for design. 6) Construction Defect coverage
Builders Risk Design Enhancements • 1) The Design Exclusion – is resulting damage covered? But is collapse an insured peril? • 2) Soft Costs and the same applies • 3) Force Majeure • 4) Systems Performance – the added liability for the D/B.
Professional Liability • Contractors Professional vs. A/E Professional – 1) definition of damages – 2) who is insured
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