Author Archives: Melissa Dewey Brumback

Home insurance perks for green-friendly design (guest post)

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house and moneyWondering how to get your residential clients to pony up more money for green design?  Check out today’s guest post by Carrie Van Brunt-Wiley and Katherine Wood.  They are writers for the Homeowners’ Insurance Blog, which serves as a resource center for insurance consumers and homebuyers across the country.

The U.S. Green Building Council’s new LEEDv4 standards present challenges for contractors, engineers, and architects – the restrictions in many cases are more stringent. There is, however an added bonus to remaining on the sustainable-building track: it’s more marketable than you think.

That’s because green homes don’t just appeal to buyers with environmental concerns any more. Now smart budgeters seek them out as well. Why? While it’s true that sustainable construction can cost about 2% more than conventional methods, McGraw-Hill’s Smart Market Report says it typically increases a building’s overall value by an average of 7.5% and improves the return on investment by 6.6%.

In fact, 80% of Generation Y homebuyers said in 2012 that they prefer energy-efficient homes, according to the National Association of Home Builders. Buying both green and new not only can save your clients on utilities costs, it also can reduce their home insurance premiums.

Pitching the insurance angle

Rightly or wrongly, the insurance industry isn’t known for innovation. However, it is embracing sustainability. Why? Americans experienced $52.9 billion in insured property losses in 2012 – $30 billion more than the average annual losses from 2001 to 2011. For more than two decades, the home insurance industry has quietly monitored climate change and its impact on the weather, according to the Insurance Information Institute.

Many providers now are committed to being more visibly sustainable in their own practices and extending their concerns to the business of insuring residential, commercial, industrial, and other buildings. Why? Because environmentally friendly construction, using updated materials and systems, typically proves to be more durable – and less likely to result in huge insurance claims.  If you already participate in these green building practices, use them to your advantage by mentioning how much clients could save.

Some environmentally friendly features that can earn your clients savings:

  • Buying new: Homebuyers typically can earn a home insurance discount (usually around 10%) when they buy a house built within the last 10 years. New homes normally prove more energy efficient as well.
  • Sustainable roof: As much as 95% of wind and water related losses to the home involve roof      damage, according to the Insurance Information Institute (iii). That’s a big deal when the average loss resulting from wind or water damage adds up to more than $6,000.

Homeowners insurance providers offer lower premiums to homes with roofs made of more durable, sustainable materials such as steel and aluminum. These roofs can save on energy efficiency, and they also can better withstand wind, rain, and hail. If your designs include these roofs you can use these expected insurance savings figures when marketing to your clients.

  • Efficient plumbing and fixtures: About one quarter of home claims in the U.S. are caused by water damage, with the average claim exceeding $7,000. By designing updated, green friendly plumbing, you can save your clients a huge mess both physically and monetarily.
  • Electrical system:      Each year, 19,000 to 25,000 fires in the U.S. involve electrical wiring or lighting equipment, according to the National Fire Protection Association. Outdated electrical systems and wiring present significantly more fire risk. The average cost of a house fire claim is more than $33,000, so buyers could qualify for lower premiums when the home includes modern wiring and circuit-breakers. New systems also are more energy efficient so they can save the client more money in utilities.
  • HVAC: Malfunctioning heating and cooling systems are the second-leading cause of house fires in the U.S. (after cooking). Newer, more efficient systems involve less risk and therefore can save your clients money in insurance premiums.

Twice the advantage

When practices you already use in your everyday work can provide you with an extra client selling point, why not take advantage? Use home insurance and utilities perks to help you sweeten the deal for your residential clients. If your work includes security systems, fire safety sprinklers, or smoke detectors, you also can alert them of additional home insurance discounts for those features. Now it can be satisfying both morally and monetarily to be environmentally friendly.

Thoughts? Comments? Questions?  Share in the comment section, below.

Picture via Flickr/401k2013 thru CC license.

 

New Green Standards; Same Green Warnings for Architects & Engineers (law note)

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The newest version of the LEED ratings system, LEED v4, has officially been released.  For a comparison of the major changes between LEED 2009 and LEEDv4, check out this downloadable form from the USGBC.LEED croppee

As the folks at Schinnerer’s pointed out, there is one major change that is fraught with peril for design professionals– the requirement for increased transparency concerning the composition and performance requirements of composition materials.

Notes the insurance carrier:
While design firms always had a level of responsibility for ongoing product research, the lack of standardized, affirmative industry data made it difficult for design firms and project owners to assess the impact of building materials on human health.
As with many aspects of sustainability in design and construction, the danger to design firms is likely to come from self-inflicted perils. When a firm accepts responsibility to “ensure that a project meets its goals by using the best products that align with project requirements,” it is essentially giving the project owner a guarantee that is both beyond the firm’s control and uninsurable by any insurance carried by a firm.

 

What is an architect or engineer to do?  NOT make guarantees.  That’s the easiest way to avoid potential problems and lawsuits down the road.

Inform your client that any green design guarantees may cause an otherwise covered claim to be denied by your errors & omissions insurance carrier.  Show them this post, or the Victor O. Schinnerer (CNA) blog article.  Whatever you do, do not make guarantees related to green design.

Your turn.  What has been your experience educating clients concerning green “guarantees” and the uninsurable nature of any such contract provisions?  Share in the comments section.

Photo adapted from (c) Albert Herring. 

A trap for the unwary: Construction contracts under Seal (Law note)

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signing contractHave you ever signed a contract that was “under seal”?  You probably have, and you probably have done so without really understanding what it means.  In North Carolina, a contract “under seal” means that the contract can be enforced for ten (10) years instead of the usual three.  In other jurisdictions, the contract can be enforced for even longer periods of time.  [For example, in Delaware, a contract under seal extends the time for brining a claim to twenty (20) years!]  Since a sealed contract extends your liability significantly, it is not something you should do lightly.

The phrase “under seal” comes from the old tradition of using a unique wax symbol (such as an engraved signet ring) to identify the owner signing the contract.  Today, however, you sign under seal when the words “under seal” or even just “[Seal]” is printed next to your signature, like this:

______________  [SEAL]
Melissa Dewey Brumback

While it is good to know about seals in general, construction professionals should be more concerned than ever about sealed contracts following a recent North Carolina Court of Appeals decision, Davis v. Woodlake Partners.  The Court in Davis held that in a contract to purchase improved property, signed “under seal,” extended the statute of limitations to the ten year statute as authorized by N.C. Gen. Stat. 1-47(2).  This is despite the fact that there is a six year statute of repose in North Carolina.  In the case, the lawsuit was brought within the 6 years, but outside of the 3 year statute of limitations for ordinary contracts.  The Court found the action was timely because of the “sealed” nature of the contract.

What does this mean for construction contracts?  You could find yourself liable on a construction contract longer than you intended.  Does this case apply in a situation where the 6 year statute of repose was violated?  The Court was not faced with that issue, so it’s too soon to tell.  The case was a divided opinion, so the state Supreme Court may be weighing in on the issue.  Stay tuned.

In the meantime, consider striking through any “seals” on your construction contracts.

Your turn.  Take a look at the last contract you were asked to sign.  Was it “under seal”?  Did you know what that meant when you signed it?  Share below.

Photo (c) Losinpun.

Emergency Bridge Repairs at Bonner Bridge (News Note)

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Bonner BridgeThe North Carolina Department of Transportation (NCDOT) has shut down Bonner Bridge on the Outer Banks this week due to emergency safety concerns.  The life safety issues were discovered after routine sonar scanning identified excessive scouring (i.e., sand erosion) on the support structures of the bridge.

The bridge, erected in 1963, is the only road over Oregon Inlet, so the NCDOT is providing extended ferry service during the bridge repairs, which could take as long as 90 days.

The Bonner Bridge has been slated for replacement for several years following damage from Hurricane Irene, but legal challenges from environmental groups as to the location of the replacement have prevented DOT from breaking ground on a $215.8 million repair contract.

As of midday on Friday, December 6th, NCDOT engineers report the following:

· The dredge is on location and the anchors are set.

·  The crew has been developing ideas on alternate discharge pattern/configurations etc.

·  The Army Corps of Engineers 404 & DENR Water Quality Permits are issued.

·  Permit modification for enlarged discharge area to allow flexibility in using the tides & attack angles to assist in filling scour holes has just been issued.

To follow the dredging and emergency repair efforts, go to the NCDOT website and Facebook pages.

To read the positions and concerns of the environmental groups related to the bridge replacement, go to the Southern Environmental Law Center’s webpage.

Your turn:  Now that the bridge is back in the news, what is your opinion as to where the replacement bridge should be located?  Do the environmental groups’ contentions have merit?  Share your thoughts in the comments below.

Photo (c) Smkybear.

Avoid Disaster: Have Your Contracts Reviewed (guest post)

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Today, we have a guest post by on of my comrades in crime (that is, a fellow construction law blogger), Chris Hill.  Here’s his official bio:  Christopher G. Hill, LEED AP is Virginia Supreme Court certified mediator, construction lawyer and owner of the Richmond, VA firm, The Law Office of Christopher G. Hill, PC.  Chris authors the Construction Law Musings blog where he discusses legal and policy issues relevant to construction professionals.  His practice concentrates on mechanic’s liens, contract review and consulting, occupational safety issues (VOSH and OSHA), and risk management for construction professionals.

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Chris Hill, AttorneyFirst of all, thanks again to Melissa for letting me post at her fine blog.  She’s one of the more knowledgeable and cool Tarheels I know (and this is coming from a Blue Devil!).  Now, on with the show.

As those who read my Construction Law Musings blog on a regular basis know, I am a huge proponent of getting a knowledgeable attorney involved in your construction contracting business early on.  While we construction lawyers are generally seen as last resorts, we can actually be helpful and (dare I even say it?) save you money.  How, you may ask, can paying a construction lawyer that ostensibly is only there when you have a claim actually save you money?  Well, as you may have gathered by the title of this guest post, I’m going to tell you.

Two words:  Disaster avoidance.

Litigation is a money, time and emotion draining process for those that don’t have the particular odd propensity of the litigator that makes them actually enjoy trials.  Litigation takes money from the bottom line because no business this side of a cigarette or pharmaceutical company can do business planning to sue or be sued.  For that reason, litigation cannot be treated as overhead and even in the case where you could get a judgment for any fees that you may spend, you are still out the cash and even then may never recover on the judgment.  A contractor cannot make money through litigation (at least in my experience).

Even in the case where you are “right” and “should never lose” there is risk in court.  Juries, arbitrators and judges sometimes go the other way.  These are humans.  They are fallible and in many ways unpredictable.  Litigation is (and should be) a last resort.

The best way to avoid this result is a good contract and good advice from those of us who have seen the results of litigation on numerous occasions and that therefore know how to avoid it.  Everything from the proper claim and notice procedures to a well scoped project are necessities up front.  Aside from the “common sense” issues that you as a business person will see coming, an attorney can see the picky “traps” that are there and are counterintuitive.  For instance, Virginia, unlike many other states, allows the waiver of mechanic’s lien rights in a contract.  You wouldn’t want to miss this thinking that you “knew” that such a clause was unenforceable.  [Editor’s Note: By comparison, in NC, such a waiver in advance is against public policy].

Much like your bi-annual visits to the dentist (yes, I compared my profession to one that is almost as popular), the relatively small expense of early review of your contracts and business practices can go a long way toward avoiding surprises and disastrous expenses later.  In short, and as you learned in kindergarten, doing it right the first time is always easier than fixing the problem later.

My final advice:  Add a lawyer to your team of advisers, you’ll be glad you did.

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Thanks, Chris, for another fine post.  And I completely agree:  the number of hours spent on claims will vastly supersede the small cost for most companies/Firms to properly prepare and vet their contracts and proposals.  Chris and I welcome your comments, questions, and thoughts!