Executives face significant risks as they conduct business
in an increasingly challenging and litigious environment, and as business
leaders struggle to help their business recover from the Great Recession,
personal liability for senior executives is fast becoming a growing
concern. Construction executives frequently believe they have no personal
risk in operating their businesses. Unfortunately, they may learn a
costly lesson when they incur defense costs or, worse, pay settlements,
judgments, or even face criminal liability. There are countless potential
bases for personal liability. Many stem from the construction work
itself, while others are tied more to the management activities. The following are a few of the growing areas that
should concern senior executives:
- Errors and Omissions and Insurance Gaps - It is well known that architects and engineers can be personally liable for any performance that deviates from the standard of care in the industry. However, most professionals are unaware of the many exclusions and conditions within their policies, and professionals can easily find themselves without coverage if they are not careful. In addition, as the construction community strives for more collaboration, contractors may find themselves without insurance coverage to the extent that they provide design-assist services, as most commercial general liability and builders risk policies exclude this risk, leaving contractors who perform design services unprotected.
- Foreign Corrupt Practices - As construction firms expand their business overseas, they frequently encounter cultures where bribery is an accepted business practice. Regardless of the foreign culture, such conduct could expose the executives involved to civil or even criminal penalties at home, as U.S. authorities clamp down on U.S. firms involved in corruption overseas.
