Chubb Highlights Construction Contractor Emerging Risks in New Advisory

April 1, 2016

As construction contractors incorporate project design and digital technologies into their businesses, Chubb has issued an advisory to help them understand and manage emerging professional liability and privacy and network security exposures.

Co-authored by two Chubb executives, the advisory, “New Business Models, Technology Raise Professional Liability Risks for Contractors,” explores various project delivery models, including combining architectural, design and contractor services in one contract, and new technologies that are being embraced throughout the construction industry. As contractors use these new models and technologies, they face new professional liability exposures linked to design.The advisory outlines specific areas of concern, including potentially inadequate policy limits and late reporting consequences. Greater design contribution can equate to more risk, with exposures ranging from errors and omissions to directors and officers liability.

Additionally, they can encounter cyber exposures arising from modeling software and the confidential project, customer and employee data they store on their own or remote networks or with a cloud provider. The authors note that cyber exposures and data breaches are costly to defend and mitigate.

“Historically, contractors’ risk has primarily been limited to standard commercial general liability, auto liability, workers compensation and builders’ risk,” said Diana Eichfeld, assistant vice president, Chubb Environmental, who co-authored the advisory with Matthew Prevost, vice president, Chubb Financial Lines. “Today, the risks are becoming more pervasive as contractors take on more aspects of project design. Sophisticated software tools are playing a greater role in daily operations as contractors handle and store a wider range of confidential and personal information – from valuable building plans to financial and employee data. As a result, contractors need to recognize the existing and evolving professional liability and cyber risks and take the necessary steps to adopt risk management strategies and obtain the appropriate insurance coverage to match the evolving exposures.”

The advisory,, covers the following facets of a contractor’s evolving role:

  • Identification of liabilities associated with project delivery systems;
  • Assessment and review of contractor’s growing cyber exposures; and
  • Risk management strategies and professional liability coverages.

Source: Chubb

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