Monday, July 16, 2012

Reducing Liability Claims in Green Construction

Reducing Liability Claims in Green Construction
Green Construction is a fast growing part of the building industry. More and more  contractors are bidding on these types of projects. Since for many builders this is a new type of construction, the risk of liability claims is increased.

Factors Cited in Green Construction Liability Claims

Buyers Expectations

Many potential customers want the square footage and high-end finishes, which they would get in a traditional built. Green structures usually have significantly less square footage with the emphasis on improved functionality rather than more space. The high-end finishes of natural materials will probably be replaced by man made materials.
The contractor needs to educate the consumer on what to expect the final product to look like. Clients must know that to go green entails sacrificing some of the space and amenities that they are used to. Contractors need to show in dollars and cents what will be saved on utility costs and improved health. Of course, the low impact on the environment has to be stressed. Furthermore, a buyer with realistic expectations will probably not move towards litigation, unlike a customer with unrealistic expectations.

Defective Materials

The standards for green materials are specific. However, the quality of these different materials may vary significantly. Talk to people knowledgeable at your hardware store and find out what products they would recommend. Likewise, discuss with a green builder in your area about the best techniques and materials to use.


The codes and rules for your community, state or federal government may be different from those for traditionally built housing. The bidding practices may also be dissimilar when competing for a green project.
Your best option is to start with your local building agency to find out the town regulations and get contact numbers for the state entity. Find out from the state organization their regulations and if they offer training or information guides. Have your state professional inform you about any federal regulations that must be followed, and who to contact about these rules.


In the competition for bids, builders may exaggerate what they can deliver to the homeowner. Construction companies need to consult with a green construction lawyer to ensure that their contractual agreements are doable and don’t overexpose the company to high risk, which could result in a lawsuit. Use Google to find a green construction lawyer in your area.


Lying to a customer about what you can deliver could set you up for a liability claim. The revenue that is produced by unethical procedures could be outweighed by the costs of litigation, insurance premiums and to your company’s reputation.

What Does Green Building Entail

Energy Efficiency

  • A high level of insulation
  •  Energy efficient HVAC  equipment, windows and appliances

Water Conservation

  • Water efficient appliances and fixtures
  • Drought resistant landscape with low maintenance

Resource Conservation

  • Use materials and techniques that conserve resources
  • Engineered wood or wood alternatives
  • Recycled construction materials
  • Sustainably harvested lumber
  • Durable products

Indoor Environment 

  • Effective HVAC equipment
  • Formaldehyde free finishes
  • Low allergen materials
  • Products with minimum off-gassing
  • Low volatile compounds

Site Design

  • Supply homeowner with education manuals or operating guides.
  • Use delivery and in-house vehicles in a way that they have less impact on the environment.
  • Adopt business practices from other industries to save resources and money.

How do you Learn More About Green Construction

Information about green construction is scattered and sometimes cost money. Wikipedia has a free overview of the green construction industry. Leadership in Energy and Environmental Design (LEED) has developed a set of standards that are widely used in the construction industry. It can be accessed through the United States Green Building council
To get any in-depth info from LEED, you need to go through one of their certification programs. If you decided to do that, the cost is tax deductible. The National Association of Home Builders (NAHB) has a Green Tool on its website that is a spreadsheet that can be used to evaluate a green project. To utilize this, you must join NAHB. Again the cost of membership is tax deductible.


In green projects, certain tasks will be contracted out. You need to educate sub-contractors about the requirements of a green project. You may want to hire contractors based on their experience with green construction.
To reduce the frustration of a homeowner, you might encourage sub-contractors to leave a business card for the homeowners. This would enable your customer to speak with the individuals, who were directly responsible for that piece of work. The caveat that must be mandated is that you must be aware of any and all complaints.

Contact Your Insurance Agent

Your insurance agent deals with liability claims routinely. He or she has a reservoir of information and contacts that could help you avoid litigation. Ask your agent for any suggestions that she or he might have. Become knowledgeable about green construction, so you don’t leave your business exposed to high risk.

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  2. Green Construction is becoming very popular and I really feel that contractors who are taking up new work need to get themselves insured through