Attention Architects & Engineers--Green Professional Liability Insurance Has Arrived
Argo Insurance Group of San Francisco has developed a green professional liability policy designed to protect architects and engineers involved in sustainable projects. Information about the policy is available here. What is unique about the policy, which is underwritten by Lloyd's of London, is that it specifically includes sustainable services in the list of covered professional services which the policy covers, including services:
provided as an accredited/certified professional in the areas of sustainable site development, water savings, energy efficiency, materials and resource selection, indoor environmental quality, and computer aided drafting and design services
In addition, USGBC members get a 5% discount on premiums.
I had the opportunity to speak to Bill Feree, Vice President at Argos and Nate Brzovich, an Argos
Commercial Producer about the new program. Check back on Wednesday for my take on the Argo policy and what's next for the future of green insurance!
GBLB: What is the background behind the development of the green professional liability policy?
ARGO: We have a very large real estate and construction practice. We saw the development of the Fireman’s Fund green building loss policy. Then we started to work with USGBC creating USGBC chapter D&O insurance. When we went out to do marketing, a lot of the stakeholders were architects, engineers and LEED APs working on the buildings. They asked how their professional liability policies responded to green building issues. We looked at policies and saw holes. The real deficiency was not having heightened standard of care language in professional liability policies, and coverage for failure to acheive LEED accredidation, tax or energy savings. We tried to put specific language in our policy to achieve those goals. Now we are promoting it.
GBLB: Who are the underwriters?
ARGO: Lloyd’s of London is the insurer. We approached quite a few. Insurers tend to take a hands off approach and then respond. The main factor was to find an insurer that was as proactive as we are in developing a product for this industry.
GBLB: What are the components of the Green Pro Endorsement?
ARGO: We added to the standard Lloyd’s policy for architects and engineers professional liability insurance. It takes the definitnion of professional services and includes as usual and customary services those services that are encompassed by sustainable services. We wanted to make it more broad. Technical consulting, site selection, water efficiency, are all covered services. We also specifically include coverage for guarantees and warranties of achievement of green certification.
GBLB: Is anything specifcially excluded from coverage?
ARGO: Environmental engineers doing phase I and Phase II are not included. The carrier did not want to underwrite these services. As soon as we get this policy launched, we will be going to carriers to write specialty policies.
GBLB: When was the program launched?
ARGO: The policy became available 3 months ago. We have generated a lot of interest, there is a bit of a sales cycle because people have ongoing policies, so there is a sales cycle that has been a minimum of 12 months.
Shari focuses on energy, environmental and building code policy, representing international companies, non-profits and trade associations in their policy and communications campaigns
Since many building and home owners are becoming utility bill conscience, people will eventually demand green building. At the same rate, I foresee the insurance industry adding green endorsements to their product lines. In time, all policies will have a "green" component since green building will be mainstream. Farmers Insurance Group has the ECO-Rebuild home policy in Texas for Energy Star rated homes.
The biggest kicker by far is right here:
"We also specifically include coverage for guarantees and warranties of achievement of green certification".
It feels like all the other elements he mentions are arguably covered under a traditional e&o policy, but the warranties are expressly excluded under those policies.
It feels like a lot of the issues covered under this policy would be likely covered under a traditional errors and omissions policy for design professionals. The big kicker that is definitely a change is this:
"We also specifically include coverage for guarantees and warranties of achievement of green certification."
Warranty coverage is excluded under E&O policies so that could be a big change.
Thank you for this excellent post. Green building has gotten extraordinary momentum now and it is only fitting that insurers should work to adapt to such trends. Argo and their underwriters in Lloyds should be commended for taking another look at their forms with this practice in mind. Now the questions are: (1) are the changes substantive (what were the specific holes they were trying to close), (2) what is the additional cost, if any, for the changes, and (3) are the changes necessary for other types of professional liability insurance policies such as legal malpractice insurance?
This is an amazing site. It feels like all the other elements he mentions are arguably covered under a traditional e&o policy.
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