The green movement is everywhere. From recycling to reducing our reliance on oil-based energy sources, Americans are doing more and more to help protect the environment, and that’s good news for our planet. It’s also good news for consumers because going green can result in a number of insurance discounts.
Green building insurance products are rapidly gaining traction in the marketplace. In 2006, Fireman’s Fund Insurance Company offered the first insurance policy for green commercial buildings. By 2010, more than 20 companies offered insurance products related to green building.
Whether you are a homeowner considering environmentally friendly updates to your property or a business owner committed to going green, it’s important to understand how these modifications will be covered under your insurance policy. Below is a breakdown of some of the innovative, eco-friendly products, services, and discounts offered by many insurers for vehicle and home policies.
If you’re an eco-friendly driver, you may be able to take advantage of a number of insurance discounts, including:
Hybrid discounts. Some auto insurance companies offer premium discounts of up to 10 percent to those who drive hybrid vehicles. A similar discount may also apply to hybrid-electric boats and yachts. Some auto policies have the option of adding an endorsement to upgrade to a similar model hybrid vehicle after a total loss.
Alternative fuel discounts. If your car uses an alternative energy source, such as biodiesel, electricity, natural gas, hydrogen, or ethanol, you could be eligible for a discount on your premium.
Pay as you drive (PAYD) programs. Several insurers offer PAYD programs, in which a device or sensor in the car tracks both speed and miles driven. That information is then used to reward policyholders who drive fewer miles than the average driver by providing them with discounts. According to some estimates, PAYD subscribers may decrease their miles driven by 10 percent or more, saving consumers money while reducing accidents, congestion, and air pollution.
Using green energy and building materials can initially cost more than using more traditional methods. However, insurers are now offering some perks to encourage green building, including:
Premium discounts for those whose homes meet stringent efficiency and sustainability standards, e.g., LEED certified homes. LEED is short for the Leadership in Energy and Environmental Design Green Building Rating System, which was developed by the U.S. Green Building Council. It is a recognized environmental standard in the building world.
Policies that take into account the cost of environmentally friendly materials and that will cover their replacement or repair with equally sustainable materials. Homeowners coverage that replaces/rebuilds after a loss with more eco-friendly materials is often offered as an endorsement to a standard homeowners policy.
Incentives for saving energy. Some companies will pay homeowners extra if they replace old kilowatt-hungry appliances with Energy Star devices—which are considered energy efficient by the U.S. Environmental Protection Agency and the Department of Energy—and recycle debris instead of sending destroyed materials straight to a landfill.
Coverage for geothermal, solar, and wind power. For homeowners who generate their own geothermal, solar, or wind power and sell any surplus energy back to the local power grid, there are now policies that cover both the income lost when there is a power outage caused by a covered peril and the extra expense to the homeowner of temporarily buying electricity from another source. Policies generally cover the cost of getting back online, such as utility charges for inspection and reconnection.
Many insurers also offer paperless transactions. Sure, it saves insurers money, but what consumers may not realize is that it also saves them money. In addition to using fewer stamps, envelopes, and paper checks, insurers are able to save on mailings—and the savings get passed on to the consumer. Using fewer resources is the best way to help sustain our world. And that’s what it’s all about, isn’t it?
Loretta Worters is vice president with the Insurance Information Institute, a non-profit organization whose mission is to improve public understanding of insurance—what it is and how it works. Follow her on Twitter @LWorters.