Insurers Matching Policies to Green Building Trend

by | Dec 11, 2009

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green building houston courthouseWhile some insurers are offering discounts for energy efficient and sustainable buildings, others say that any such discounts need to ensure that buildings not only save energy but prove resilient to storms, fire and other maladies. Speaking at the Climate Risk Summit of the National Association of Insurance Commissioners, insurers nonetheless indicated they want to participate in addressing climate change, reports National Underwriter.

Earlier this year, NAIC mandated that members tell regulators about financial risks brought on by climate change.

Structures that conform to green building standards tend to have a lower energy load from energy efficient lighting, which reduces the risk of fire. More durable, energy efficient windows also stand up better during storms. Insurers are taking these factors into account not only for residential buildings but also office complexes, factories and other commercial buildings, reports the Wall Street Journal.

Liberty Mutual Property offers the GreenSelect policy, which protects the typically more expensive energy efficient upgrades in the case of a loss. The policy also covers interruption of income from alternative energy sources that may be damaged, or to repair a conventional building to “green” standards.

GreenSelect also pays the charges associated with recertifying buildings to new, higher standards from the U.S. Green Building Council’s LEED Certification Program, or the Green Globes Certification Program.

Another emerging type of policy protects a company’s board of directors from claims that the company has caused environmental damage, according to the Wall Street Journal.

In addition to insurance for buildings, some insurers are offering special premiums for drivers who chalk up fewer miles on their cars, recognizing the benefits in reducing emissions, as well as the reduced accident risk from less time on the road, reports the Wall Street Journal.

The discounts come with a certain amount of compliance reporting, including electronic devices to track miles driven. GMAC Insurance uses its OnStar system to monitor drivers who log fewer than 15,000 miles annually, offering a discount of up to 54 percent.

Other policies rely on self-reporting or third-party verification.

Another firm, Dallas-based Milemeter Inc., sells insurance in 1,000 to 6,000 mile increments.

Owners of hybrid cars and boats also can qualify for lower rates. Travelers Cos. has a 10 percent discount for hybrids in 44 states and Washington, D.C. In Europe, some insurers offer rate cuts of up 50 percent, according to the Wall Street Journal.

The NAIC said that it would not require insurers to offer discounts that reward lower emissions, however, the New York Times reports.

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