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Why Design-Build Contractors Need Professional Liability Insurance

June 28, 2021

While the design-build construction method has many benefits, it can expose firms to liability risks they wouldn’t otherwise experience during the traditional design-bid-build method.

With a traditional project, the owner has two contracts: one with the designer and another with the contractor. Design-build construction projects allow the project owner to have one point of contact leading to more collaborative problem solving.

Traditional contractor project workflow
Design-build contractor project workflow

It’s essential that design-build firms understand all of the risks associated with the design-build process and the best design-build insurance solutions to protect their projects.

What is Design-Build?

Design-build is a growing method to deliver construction projects where the owner of the project has one point of contact for both the design and construction elements of a project.

The distinction of roles and responsibilities is less clear with design-build projects and the risks often 

What are the risks in design-build contracts?

Unlike the more traditional design-bid-build project-delivery method, there isn’t a clear distinction between the firms performing the construction work and the architects and engineers offering their professional services.

This means design builders are accountable for the accuracy of the plans, the execution of construction, and the safety of the job site. 

As such, design-builders can be held liable for workplace accidents, specification errors, material failures, construction errors, and delays.

Essentially, by taking on the design elements of a project, design-build contractors inherit more professional liability. These liabilities can result in severe financial losses.

Design-Build Construction Insurance

When it comes to managing all of the new risks the design-build process brings, commercial general liability policies are simply not enough. Under most commercial general liability policies, professional liability exposures are excluded.

In particular, insurance claims related to the act of preparing blueprints, reports, surveys, field orders, change orders, specifications and other professional services could all be excluded from coverage.

Professional liability policies are designed specifically to fill in gaps caused by general liability limitations. 

For design-builders, the most effective way to protect against exposures is to secure unique design-build insurance tailored to them. Specifically, professional liability policies can provide the proper coverage for design-build firms.

Design-build insurance policies provide coverage for claims stemming from an actual or alleged act when performing a professional service.

Working in conjunction with other commercial insurance policies, professional liability insurance is a critical component to a design-builder’s risk management program. What’s more, working with a qualified insurance broker, these policies can be tailored to meet the unique needs of design-build firms. 

Protect Your Design-Build Project With a Professional Commercial Insurance Broker

Design-build construction is an increasingly popular approach with many benefits. However, using this method increases professional liability exposures and creates a variety of risk management challenges.

When taking on design-build projects, firms have a lot to consider, including performance guarantees, licensing requirements and appropriate coverage.

Contact Scrivens today to learn about your firm’s identification options, review your exposures, and bolster your risk management options.