Since the introduction of LEED (Leadership in Energy and Environmental Design) building standards by the U.S. Green Building Council in 2000, the number of building projects and renovations subject to LEED standards has continued to grow.
In addition to private property owners and developers who are building to LEED standards, the federal government has mandated the use of LEED for new building construction, and many cities require it in their building codes for new construction.
“Construction of environmentally friendly and sustainable buildings will represent a significant new market for the construction industry,” says Philip Glick, senior vice president of ECBM Insurance Brokers and Consultants. “However, it’s also likely that new risks are being created that can have an impact on the building owners, developers, contractors and design professionals involved in these projects.”
Smart Business spoke with Glick about the benefits and risks of building to LEED standards, and how having the right insurance can help mitigate those risks.
What are the benefits of LEED?
Green buildings have reduced heating, cooling, electrical and water usage costs. Lower operating costs increase building values and attract better tenants. Green buildings also improve the environment through the generation of less waste and lower energy usage and pose better insurance risks with fewer losses and lower premiums due to:
- State-of-the-art electrical, HVAC and plumbing, resulting in fewer fires, equipment breakdowns and water damage claims.
- Reduced water leakage through high-efficiency, low-flow plumbing systems, resulting in fewer mold and contamination losses.
- Better lighting, which results in fewer slip-and-trip liability claims.
- The use of low emission paints, floor coverings and furniture, which provide better indoor air quality and reduce sick building syndrome claims.
- Improved lighting and sustainable features, which increase worker productivity and employee satisfaction and, therefore, result in fewer workers’ compensation claims.
What are the risks associated with LEED?
Along with this rapid growth in LEED-certified construction, many buildings have been built without proper planning and experience in the design, construction and commissioning phases. As a result, they don’t always achieve lower energy usage and waste generation. They can also create other risks. For example, one project involved the installation of a vegetative roof to reduce water runoff and heating costs. Although the architect and builder accounted for the capacity to handle the additional weight of plants, soil and drainage systems under normal conditions, they failed to anticipate the additional weight due to heavy summer rainfall, which nearly resulted in the collapse of the building.
LEED certification may not be achieved at all unless all consultants, suppliers and contractors have extensive LEED project experience. And many new technologies may simply not perform as expected, particularly if suppliers and contractors are not highly experienced in LEED systems and construction.
