By Ursula Knowles, Assistant Vice President, Information Development
According to the Environmental Protection Agency (EPA), Green Building projects advance the “triple bottom line,” reducing the overall impact on human health and the natural environment by:
- – Efficiently using energy, water, and other resources.
- – Protecting occupant health and improving employee productivity.
- – Reducing waste, pollution, and environmental degradation.
It is important to note that green building components, energy efficient measures, and waste reduction don’t necessarily mean that pollution incidents will not occur at green building projects. In fact, pollution incidents can happen when you least expect them and can be the result of building materials that once were thought to be good for building occupants, actually being hazardous.
Very often, building materials are used for years before health and safety concerns are uncovered. For example, asbestos was originally thought to be a wonderful building material, as it is strong and capable of resisting fire and heat and was relatively inexpensive. Years later, it was found that asbestos materials could become friable (i.e. crumbly) and be inhaled by building occupants, causing serious health effects, particularly mesothelioma and asbestosis.
Even green or energy efficient measures have backfired in some instances. A few years ago, waterless urinals were installed at Chicago’s City Hall in the men’s rooms. They were lauded as saving 50,000 gallons of water per year, per urinal. However, without enough water per flush, the copper pipes corroded and urine started to collect in the restroom walls. The smell of urine spread throughout the City Council Chambers and the result was that the water conservation effort was abandoned. Similar water saving measures and subsequent consequences have occurred in other parts of the country.
In addition, just because a project is a “green” building project, does not mean that waste (including hazardous waste) will not be generated. This is in spite of the fact that one of the ultimate goals of green building is to reduce waste. In any building project, cleaners, solvents, paints, and pest control agents are used, and many of these products contain hazardous materials. This has recently been brought to light by state environmental regulators making a concerted effort to inspect retail operations that are supplying products to building contractors. These inspections are leading to enforcement actions against retailers as a result of the improper disposal of products, including cleaners, solvents, paints, and pest control agents which are often the same products that building contractors use on all building projects.
Higher Risk of Reputation Consequences
Occupants of green buildings prefer a “green” life style for a variety of reasons. Some of them want to make the world a better place and live in a green building because they are contributing to waste reduction, energy conservation, or air/water quality improvement. Others are there because they have serious health problems and believe that “natural” building components and residing in a “clean” environment will result in better health for them. If there is a pollution event that occurs or stems from a green building, the reputational risk to the owner/operator is heightened and could lead to loss of rents or lower building occupancy, in addition to possible elevated media attention.
Environmental Concerns in Green Construction Projects
- – When buildings are built with green components such as bio-based, renewable, reused, or recycled materials that have not yet been tested or are retrofitted with green components, there may be unanticipated indoor air quality events.
- – Implementing water efficiency measures such as waterless urinals could result in accumulation of ammonia and other urine components within the structure of the building and impacting indoor air quality for occupants.
- – Moisture could penetrate the outside envelope of a building from improper ventilation, causing condensation, plumbing leaks, or improper rainwater diversion. The moisture may introduce airborne viral and bacterial agents or mold. Water intrusion can be a result of watering green roofs, resulting in mold accumulation throughout a building.
- – Graywater, which is recycled water from hand basins, showers, or baths is used for non-drinking purposes such as toilet flushing or land irrigation may either be comingled inadvertently with drinking water sources or not treated adequately so that it contains pathogens which may contaminate the areas where it is used.
- – Carbon monoxide may be released from fuel fired devices including ovens, boilers, space heaters, and water heaters. Recently, a few brands of tankless water heaters were recalled because of their link to carbon monoxide poisoning. While the water heaters were being transported to their final destination, a shift of water heater components occurred, causing some of the units to stop functioning as they should which led to a risk of high carbon monoxide concentrations.
- – With energy efficient measures making the building envelope tighter, there is more opportunity for indoor air quality to be impacted by off-gassing of adhesives for areas such as carpeting, rubber floors, wood flooring, ceramic tile, subfloors, dry wall, and panel and structural glazing.
- – Because automatic sensors and monitoring devices are used more often in green building construction, there may be spaces within a green buildings that are not accessed often. If a moisture problem (like mold) or air quality problem develops, it may not be uncovered until it becomes a sizeable, expensive problem.
- – Because some of the waste materials from green construction projects may be materials that waste handlers are not familiar with, those materials may be disposed of at waste sites that are not prepared to handle them, which could lead to hazardous waste enforcement actions against the contractors or owners that generated the waste. In addition, once a project is finished, building occupants may not dispose of waste materials appropriately (for example, occupants may throw away waste instead of recycling it, as was planned).
Environmental Insurance Market Response to Green Building Exposures
Environmental insurers are closely watching the evolution of risk management in the green building area. Although many environmental insurance products used for non-green construction projects can also be useful for green construction, (such as those that would respond to claims against insureds for mold, legionella, carbon monoxide, and other indoor air quality contaminants) some insurance carriers have developed endorsements specifically for green construction/operational activities such as:
- – A green remediation aggregate limit endorsement which is designed to incorporate green cleanup technologies into cleanup activities related to a covered pollution event. Some of these technologies might include minimizing energy and water use, employing renewable energy and reducing, reusing and recycling materials and waste.
- – A green standards aggregate limit which is designed to offer an additional limit of liability to repair or replace property that is damaged in the course of a covered cleanup activity to comply with green standards, such as LEED Green Building Rating System and other products, methods, and processes that help improve the environment, increase energy efficiency, and enhance safety and property protection.
- – Endorsements to add crisis management protection to help maintain or restore public confidence in the named insured and their property in the event of a pollution event.
- – Premium discounts for LEED-certified building projects
With the growth of residential and commercial building in the U.S., and the desire to have sustainable and efficient building practices, it is important that green builders take the necessary steps to ensure their efforts are being thoughtfully executed. Just because a building is green doesn’t mean there won’t be environmental problems stemming from the design and materials. It is crucial that green building contractors are properly insured for these exposures. For information on environmental insurance products, contact Beacon Hill Associates.
When Good Deeds Turn Bad, Wall Street Journal, March 3, 2010