Design-build is a project-delivery method that provides an owner with one point of contact for both the design and construction elements of a project. This process has gained popularity in recent years largely due to its simplicity, affordability and speed.
While the design-build method has many benefits, it can expose firms to risks they wouldn’t otherwise experience during the traditional design-bid-build method. As such, it’s essential that design build firms understand all of the risk associated with the design-build process.
Unique Design-build Exposures
Unlike the more traditional design-bid-build project-delivery method, there isn’t a clear distinction between the firms performing the construction work and the architects and engineers offering their professional services. This means design builders are accountable for the accuracy of the plans, the execution of construction and the safety of the job site.
As such, design-builders can be held liable for workplace accidents, specification errors, material failures, construction errors and delays. Essentially, by taking on the design elements of a project, firms inherit more professional liability. These liabilities can result in severe financial losses.
When it comes to managing all of the new risks the design-build process brings, general liability policies are simply not enough. Under most commercial general liability policies, professional liability exposures are excluded from coverage.
In particular, claims related to the act of preparing blueprints, reports, surveys, field orders, change orders, specifications and other professional services could all be excluded from coverage. Professional liability policies are designed specifically to fill in gaps caused by general liability limitations.
For design-builders, the most effective way to protect against exposures is to secure unique insurance tailored to the sector. Specifically, professional liability policies can the proper coverage for design-build firms.
These policies provide coverage for claims stemming from an actual or alleged act when performing a professional service. Working in conjunction with other policies, professional liability insurance is a critical component to a design-builder’s risk management program. What’s more, working with a qualified insurance broker, these policies can be tailored to meet the unique needs of design-build firms.
Design-build construction is an increasingly popular approach with many benefits. However, using this method increases professional liability exposures and creates a variety of risk management challenges. When taking on design-build projects, firms have a lot to consider, including performance guarantees, licensing requirements and appropriate coverage. Contact KRG Insurance Brokers today to learn about your firm’s identification options, review your exposures and bolster your risk management options.