Schinnerer's RM Blog - claims tag

Energy Usage and Sustainability Projects

Thu, 13 Dec 2012 18:52:00 GMT

A recent survey says that energy use reduction is the most-often sued characteristic of sustainability projects. According to a survey of European architects, the main characteristic of a sustainable project is energy use reduction. The survey was conducted among 1,200 architects in Germany, France, Italy, Spain, the United Kingdom, and the Netherlands.

When asked to identify the most implemented solutions on sustainability projects, most of the architects stated that energy use reduction features were the most often implemented design solutions. Sustainability is broadly defined as meeting the needs of the present without compromising the ability of future generations to meet their own needs, and encompasses more than just reduction in energy usage. Use of renewable energy, use of recyclable materials, and water use reduction are some of the highly touted features that should also be considered in project designs. Your client’s perception of sustainability projects, however, could realistically be limited to a reduction in energy usage.

The Risks of Oral Agreements

Thu, 08 Nov 2012 13:30:00 GMT

One of the most important rules in good risk management is to avoid oral agreements. Our claims statistics back that up – compared to when a standard American Institute of Architects or Engineers Joint Contract Documents Committee contract is used, a claim involving an oral agreement is 27% more likely to require an indemnity payment. Below is an example of a real claim handled under the Schinnerer and CNA professional liability insurance program that involved an oral agreement:

A developer filed a lawsuit against an engineer alleging that the engineer assured him that he could obtain a zoning variance that would enable the developer to turn existing premises into a nightclub. The engineer had no written agreement outlining the extent of his scope of services, and the variance was ultimately not obtained. The plaintiff developer alleged that he would not have invested large sums of money had it not been for the engineer’s assurances. The plaintiff’s damages were alleged to be $400,000 and included rents, taxes, and construction costs associated with the renovation of the premises and construction of the nightclub. With no written contract, the claim became an argument between the two parties. The claim settled for $200,000, with expenses of $12,000.

For more information including risk management advice, please see our entire oral agreements claims study (access limited to policyholders and brokers). This claims study was updated with fresh claims statistics this month.

Sports Facilities Claims Study

Tue, 24 Jul 2012 11:44:00 GMT

From 2000 through 2009, the average indemnity payment for a sports facility claim was $132,945. As is consistent with other types of claims, clients filed the most claims (66%), and the majority of these claims were made against architects (53%). The following is an example of a sports facility claim:

A design professional was retained to provide architectural and engineering services for the design of a city-owned sports arena. The general contractor bid the project on a guaranteed-maximum-price basis. The concrete subcontractor filed suit, claiming more than $3.8 million in delays and extra costs, which included an allegation that the final revised drawings added $950,000 worth of work. However, the general contractor would not allow additional time. The subcontractor also alleged that there were design deficiencies, the work had to be completed out of sequence, and the city changed its mind about parts of the project after the subcontractor had already mobilized staff for the work. This forced the subcontractor to accelerate the work, incurring additional labor costs, overhead, and other expenses. Although the design team may have been slow in responding to RFIs, investigation revealed that the general contractor did not pass many of the RFIs to the design team in a timely manner. The claim settled for $950,000, which included a $125,000 contribution from the design team; defense costs were $76,000.

For more information including risk management advice, please see our entire sports facility claims study (access limited to policyholders and brokers).

Environmental Claims Studies

Thu, 14 Jun 2012 13:50:00 GMT

From 2001 through 2010, some of the most severe claims against firms in our environmental program derived from manufacturing projects, with an average indemnity payment of $220,956. Indemnity payments from office building/bank projects averaged $213,157. Claims stemming from civil engineering projects (highways, bridges, tunnels, and dams) had average indemnity payments of $130,627. The following is an example of a real claim made against an environmental policyholder:

An environmental engineer was retained by a developer to provide a Phase I Environmental Assessment for a property to be developed into a residential subdivision. During construction, the Department of Environmental Protection halted work on the project when hazardous chemicals were found to be contaminating the site. The developer filed suit for the clean-up costs. There were multiple defendants in this case, and the environmental engineer was not considered one of the primarily responsible parties. However, it was alleged that the environmental engineer failed to detect the hazardous materials. The engineer argued that at the time he conducted the assessment several buildings where contaminants were later found were inaccessible. However, an expert hired by CNA felt that the engineer could have been more specific in advising the developer of the need for further sampling at the site. The engineer could have been more specific in advising the developer of the need for further sampling at the site. The engineer faced additional exposure due to the uninsured status of both the firm that conducted the Phase II Assessment and the general contractor.

Compounding the problem was the fact that the general contractor continued demolition even after being warned of the presence of contaminants. The continued demolition spread the contaminants beyond the initial locations. Defense counsel believed that the engineer was facing potential exposure of up to $1 million on both the original claim and a cross-claim from a co-defendant. This claim settled for $234,500, which was much less than defense counsel and CNA anticipated paying on behalf of the engineer. CNA also paid $138,000 in expenses.

For more information including risk management advice, please see our entire environmental claims study (access limited to policyholders and brokers). This study was updated with current statistics in August, 2011.

Parking Garage Claims

Fri, 27 Apr 2012 12:21:00 GMT

From 2001 through 2010, claims in the Schinnerer and CNA professional liability program involving parking garages were most often brought against architects (42%), civil engineers (20%), and structural engineers (19%). The following is an example of a parking garage claim:

An architect entered into an oral agreement to provide architectural and engineering services for an office structure and garage. The architect retained a structural engineer as a subconsultant, and the structural engineer in turn retained a post-tension design subconsultant. During construction, a number of tendons placed within the poured concrete slabs were prematurely cut by the contractor. To repair the decreased ability to provide tension to the tendons, a coupler was secured to the end of the tensions and detensioning chair was used to draw the tendons taut during the tensioning process. During this process, one of the cables pulled free, instantly killing the worker in the detensioning chair. The architect only had vicarious liability for the subconsultants; there was no direct liability. Also, the architect did not have construction site responsibilities when the plaintiff was killed. The architect was able to obtain a dismissal of the claim brought by the employee’s family, but expenses totaled $92,000.

For more information including risk management advice, please see our entire parking garages claims study (access limited to current policyholders and brokers). This study was updated with current statistics in September, 2011.