This article was contributed by Carrie Van Brunt-Wiley, Editor of the HomeInsurance.com blog.
The Greensburg story of recovery is amazing. The community's emergence from the nearly total devastation of the May 4, 2007, tornado, and its dedication since then to sustainable building has been inspiring.
The good news for homeowners who have rebuilt their homes with sustainable materials and systems, is that many of the tenets of sustainable building also reduce your home’s risk of being damaged due to severe weather and other unexpected events. Furthermore, homes that are at a lower risk for damage also often qualify for the most preferred homeowners insurance policies- translating to the most comprehensive coverage and competitive rates.
Folks in Greensburg – the town with the most LEED-certified buildings per capita in the world – know something that other people across the country probably don't. Construction of homes with sustainable materials, when green design is included from the beginning of a project, costs only about 2% more than conventional construction. That's according to a study done for more than 40 California state agencies. That additional cost is more than recovered over the life of a green home due to lower electricity and water costs alone.
Since the replacement cost of a home greatly affects the amount of coverage a homeowner must purchase, insurance carriers typically require homeowners who want their homes rebuilt with green materials to purchase an endorsement on their policy to cover additional costs in the event of a claim. While this can slightly increase the cost of insurance, carriers help to counteract that additional cost by offering some green certified homes a 5% discount.
On top of that, green homes typically also qualify for preferred policies, which equates to better premiums.
All in all, sustainable building can help lower an individual homeowner's costs. In addition, it may also help lower rates across the entire market. Insurance carriers' rates are based on being able to cover their losses in the event of a claim. In fact, the Insurance Information Institute reported that 92% of the $62 billion paid in homeowners insurance premiums in 2011 went towards paying claims. If sustainable construction reduces the frequency and severity of claims filed, it just may help throttle future rate hikes.
Green home owners who want to take advantage of all available homeowners insurance discounts should talk to their insurance agent about the discounts and coverage options available to them.
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