Insurance Update: Insurance Coverage Goes Green

Green homeowner’s insurance followed, also in 2008; currently 31,000 policies are in effect in 36 states, with $87 million in premiums. Homeowners can insure existing green homes or, upon loss, rebuild with green features. As with the commercial insurance, already-green homes qualify for a 5% discount.

Fireman’s Fund had previously offered a discount to buildings already green-certified under its Green-Gard coverage. Stephen Bushnell, senior director of emerging industries at Fireman’s Fund, says that the insurer has “discounted LEED-certified buildings since 2006. Initially,” he adds, “we believed that LEED-certified buildings would be less risky than traditional buildings due to building commissioning (mandatory under LEED NC [New Construction] and encouraged under LEED EB [Existing Buildings]).” (For more information on LEED commissioning and ratings, go to usgbc.org).

Commissioning, he explains, addresses the building systems that “contribute to most of our losses: electric and plumbing. We concluded that commissioning not only makes a building greener, it makes it safer. Our loss ratio for our green coverages has confirmed our initial assumptions. It led to a conclusion that energy-efficient buildings are better risks than energy ‘hogs.’ Hence our decision to recognize Energy Star-rated buildings with a rate discount.”

Fireman’s Fund risk services consultants can also help property owners find out exactly where they stand with regard to water and energy consumption through the EPA’s Portfolio Manager tool. Bushnell says that EPA developed its Portfolio Manager system “several years ago. We have trained our risk services consultants to assist our insureds as they maneuver through the process.”

Planners with business owner clients who want to take steps toward energy efficiency and diminished environmental impact might consider sending them to the EPA’s Portfolio Manager tool. There’s an overview and much more information available on the Energy Star Web site at energystar.gov. Eligibility requirements, types of buildings covered, and explanations of the tools and data used are available, along with downloadable PDF documents on everything from tracking progress to Energy Star certification.

Fireman’s Fund’s green initiatives aren’t over. Says Bushnell, “We continue to develop a deeper understanding of the insurance and risk management needs of our green and sustainable [clients] (including those who would like to move in that direction) and will develop products and services that meet these needs.”

Marlene Y. Satter, a freelance business writer who can be reached at [email protected].