Green Industry Articles

Green Insurance

The insurance industry plays a significant role in the green building process. But, according to Trent Massey, insurers and underwriters are a bit behind in getting up to speed with properly valuing and insuring green property.

Such was the subject of a GRC Webinar that Massey, LEED, a property programs instructor for Vale Training Solutions, conducted in February 2011.

Massey outlined some of the challenges facing the insurance industry in insuring green buildings.

He also emphasized the importance and challenges of properly valuing green elements to be sure that property owners don't buy too little coverage. Among the Webinar's highlights were:

• Like kind construction (LKC): Of particular concern with green buildings is the insurance industry concept of like kind construction. Insurers may opt to replace materials in a house with items it considers equivalent to the old material. But, says Massey, there may be no provisions in traditional policies to replace green aspects of a house with equivalent green materials. So the recycled wood a homeowner got 300 miles from home could be replaced with virgin material manufactured in China, for instance.

• Maintaining certifications: Maintaining green certifications after a loss poses additional challenges. Many insurers, Massey says, may balk at paying for the performance testing required by green certification programs.

• Green certifications: If there's damage or loss of a LEED home, will the LEED materials, systems and green rating be retained after rebuilding? Should such a house be insured with traditional homeowner's policy or a traditional policy with green endorsements?

• Green endorsements: Massey explained some of the ins and outs of green insurance endorsements that can be used to better insure green properties. He also provided a list of insurance companies that are making inroads on green coverage.

• High-ticket items: Of particular concern are properly valuing some of the more expensive green items in a property, such as solar and geothermal components, high-end landscaping, and finish materials, such as recycled glass countertops.

• Hidden elements: Another consideration is insuring items that aren't obviously green. Those could include everything from no-VOC paint, CFL bulbs, and recycled hardware to organic bedding, pillows, and furniture.

To learn more about green insurance, view the webinar at