Today’s construction landscape is constantly changing. Technology is evolving and new systems and processes are being adopted. Design and construction as a whole is becoming more complex, and new project delivery methods are reshaping the way contractors contribute to projects.
Now, contractors are playing a bigger role in the design phase of projects and may find themselves providing professional advice, consulting with others during the design phase, providing architectural and engineering services, managing construction, and recommending materials and processes. While this provides general contractors with more opportunities for collaboration and profit, it also exposes them to more risks.
Our Nashville contractor attorneys encourage general contractors to be cognizant of the risks that come with their increased design-related responsibilities. This two-part article will discuss ways in which contractors can reduce their risk.
Risk shifting begins with the construction contract. Project owners are modifying contract terms and placing greater risk on contractors. Contractors must ensure that they are identifying and assessing their risk exposure more carefully. They must also understand how that risk is allocated between all parties, including owners, engineers, and architects. If you do not have a firm grasp on appropriate risk transfer methods or have processes in place to manage your risks effectively, consult with a Nashville contractor attorney from Cotney Construction Law. An attorney can ensure your contracts are clear and contain the proper contract language to balance risk appropriately on your projects.
General liability insurance covers bodily injury or property damage resulting from typical construction operations. It does not, however, cover damages that originate from providing design services or engineering-related services on a project. Even if the design professional has their own liability policy, it is highly unlikely that it will extend to the contractor. On the other hand, adding an exclusion to a general liability policy may provide some level of protection against design errors. If you are playing a bigger role in the design phase, speak with your agent to be sure that your insurance is broad enough to protect you from design liabilities.
In part two, we will focus on understanding contractual responsibilities and appointing a dedicated risk manager, so you can mitigate design risks.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.