The fire that engulfed London’s Grenfell Tower, has been blamed on the off-label use of a flammable, plastic exterior cladding. According to its U.S. manufacturer, the material is never recommended for use on high-rise buildings, including the 24-floor apartment tower in London’s North Kensington neighborhood.
Use of such a product is prohibited in the U.S. and Canada, where the International Building Code (IBC) strictly enforces flammability tests on all building materials prior to use. But, a few jurisdictions in the U.S. have recently rolled back some IBC stringencies. New legislation in Washington D.C., Minnesota, Indiana and currently under review in Massachusetts, reduces materials testing requirements and eliminates the need for tests on some materials all together.
Lessons Learned from Grenfell Tower fire
Regardless of which role you play in the building team, a few lessons learned from the Grenfell Tower fire can apply to all:
- You get what you pay for. There’s a growing number of construction defect claims these days concerning anything from faulty materials, like the exterior cladding on the Grenfell Tower, to luxurious condominiums with beautiful appliances and marble countertops, that have low-grade plumbing and piping infrastructure behind them. Do your due diligence by reviewing proposed engineering plans and using the specified materials, or equally comparable products.
- Are they honest with you? Once the materials are in or on the building, it’s impossible to tell if its components are what they say they are. A dishonest installer or subcontractor could use inferior materials.
- Heed warnings. Installation, usage and care instructions should be strictly adhered to. Make sure products are used in the manner they were intended.
Protect yourself with the right liability products
Each building team member will come head to head with their own liabilities in the face of a building catastrophe. Here are some liability products to consider should you face similar risk.
Real Estate Owners and Developers, consider the following:
As a building owner, liability lawsuits related to fire, water, lightening, earthquake damage, etc., will be covered under your General Liability (GL) policy. Owners and developers may want to consider written contracts that hold contractors and other building team members responsible for their work. Ideally, when a resident sues the building or owner, these contracts would allow the transfer of some of the risk when it comes to materials selection or product installation.
Builders and Contractors, consider the following:
Builders and contractors must have enough General Liability (GL) policy limits to cover fallout from decisions made pertinent to the following exposures: claims of bodily injury, property damage, completed products, faulty workmanship, immediate medical expense claims and more. Depending on your contract with other building team members, you could be held liable for more than you think.
Property Managers, consider the following:
A property manager’s liability will also be covered by a GL policy. While the property manager doesn’t have to insure the building itself, you are responsible for their employees in the facility and their facility’s disaster preparedness. All high-rise buildings should have an emergency action plan that includes practice drills. Property managers will bear some legal responsibility to get people out of a fire as safely as possible.
Product Manufacturers, consider the following:
Have formal product liability (PL) coverage (an extension to your GL policy), and when necessary, product recall coverage (an endorsement to your GL policy). Small businesses underestimate the importance of product coverages, and falsely assume their GL policy will cover product liability. A PL extension will cover expenses including product-related lawsuits, medical and financial damages and settlements when your product hurts someone, makes them sick or damages their property.
Product Recall coverage will pay for the logistical costs of the recall itself, including expenses related to collecting recalled products from the public, costs to replace or reimburse the public, fines paid to government agencies because of the recall, disposal of recalled products, related public relations costs and more.
In the case of the Grenfell Tower fire, the first lawsuit to surface was a shareholder lawsuit from the manufacturer’s shareholders, which could be covered by a Directors & Officers (D&O) insurance policy. D&O insurance covers defense costs and damages should any of your employees be named in a lawsuit, regulatory action, or face allegations of misrepresentation or breach of fiduciary duties.
Assess your current liability
Real estate owners and developers, builders and contractors, property managers, and product manufacturers, must take steps today to minimize the liability their European counterparts are now facing, especially as codes and standards are further reduced here in the U.S.
As a first step, identify new buildings in the U.S. jurisdictions that have passed codes and standards reform to make sure you won’t be held liable should a similar situation happen here. Then, talk to your HUB broker and risk services specialist to find out how you can be property covered for any risks that come your way.