Building Green: What it Means for Your Business | Construction Law …: Kevin Kaiser of Suretybonds.com discusses … [link to post]

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Also, property insurance includes provisions for rebuilding damaged portions of a structure to compy with building code (Ordinance and Law Coverage). If an existing structure is damaged by a covered peril, the new structure must be built to comply with the revised building code. In the case of California, there may be additional expense to rebuild to the green building code, so insurers may exclude, limit or raise the price for such coverage. Property owners should consult with their insurance counselor as to the impact of the code change on their specific property insurance policy. Worst case scenario is a property owner is underinsured after a loss when the insurer won’t pay the additional costs to bring the new space up to the current green building code due to an exclusion or limitation on their policy.

In a state like Washington, this is a great debate. We have mandatory contractor bonding and heavy LEED construction.

I think the question might come down to the bond’s intention – is it to bond the contractor’s performance of the work, or work’s performance, or both. I think that sureties are going to have to embrace the challenge and find new pricing models for LEED building. Reaching LEED (or other similar) standards is part of a contractor’s job scope, like it or not.

Utilizing smart prescription periods and inspect & release mechanisms might make it easier on sureties. But I for one, would certainly like to see a contractor bonding company pop up and take on the challenge.

Thanks for the article!