"Green Buildings" May Increase Risk of Defective Materials

November 03, 2012

New commercial construction increasingly uses "green" technology such as wind turbines, fuel cells and even vegetative roofs in an attempt to lower energy costs and be more environmentally responsible. Commercial enterprises use green buildings to cultivate an image of corporate responsibility that will appeal to consumers. In addition, studies have shown that green buildings, which tend to have natural light and fresh air, can improve employee concentration and boost productivity.

It is no surprise, then, that green commercial building construction is on the rise. Investment firm Lux Capital recently noted that between 2000 and 2012, investors spent more than $4 billion on green buildings. Universities, libraries and other public buildings are also getting in on the trend. The University of California alone has 100 LEED (Leadership in Energy and Environmental Design) certified buildings, for example, the most in the country for any school of higher education. McGraw-Hill Construction reports that green buildings now account for 41 percent of commercial construction projects.

However, as green buildings are becoming more sophisticated, the risk for construction defects also rises.

That is not to say green buildings are not feasible, especially for certain green technology. Obtaining a basic LEED certification is not necessarily riskier than using traditional construction methods. However, moving up to Gold or Platinum LEED levels means using less "tried and true" construction methods and technologies. New, sophisticated green construction buildings thus increase the odds that one or more features of the building will contain a construction defect or require repair.

For example, photovoltaic or solar panels are not particularly complicated and have been involved in construction for years. However, wind turbines can come with increased risk, meaning a higher insurance cost associated with the building. Rod Taylor, managing director of Aon's Environmental Group, recently told the Insurance Journal that he is already seeing claims for vegetative roofs, as in one instance where the roof began leaking before construction was complete, causing severe damage to the inside of the building.

Green Insurance

Traditional insurance does not necessarily cover certain green technology. If green construction malfunctions or needs replacement, and the responsible party does not have green insurance, it would have to pay the difference between the traditional construction and the cost of the (more expensive) green construction.

Green insurance can cover some of the costs associated with defective green construction. In addition, green insurance provides some measure of compensation should building not meet specifications for energy use or certification.

Claims and Lawsuits

Green buildings, as an emerging force in commercial construction, carry significant benefits to all parties. However, with new endeavors come unexpected complications. Any party responsible for a green construction project that ultimately showed a defect should contact an attorney experienced with construction litigation and denial of insurance claims.

Article provided by Aaroe Law Offices
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