Green Insurance: A New Shade of Coverage

“If you buy our policy and purchase this endorsement, whatever gets repaired or replaced, you can replace it with a greener, more energy-efficient or more rapidly renewable material,” Valzania says. “If you want the bamboo floors instead of linoleum or the Thermopane™ windows instead of single-pane glass, we’re willing to pay additional funds to repair and replace with upgraded green products.” How does the company decide how much the homeowner can spend upgrading to greener materials? Valzania says the determination process takes a few steps. The company sends out an adjuster who gives an estimate on what it takes to replace or repair with the same type and quality of material as what was lost or damaged. But if you have one of the EcoSurance policies, you can then call in local contractors—preferably those who have experience with green remodeling or building—to find out what your options are when replacing your loss with a more eco-friendly alternative. Eco-Replacement Cost Limitations Of course, however, insurance is still a business, and there has to be a cap to eco-replacements expenditures. If you suffer damage to your house, green homeowners’ insurance policies generally replace what’s currently in your home with more energy-efficient or environmentally responsible options. “We couldn’t have a 1900s totally non-green home burn down and replace it with a geothermal home with a sod roof,” Valzania says. “We have to maintain the fundamental property of indemnity that you’ll be returned to your initial state but with greener alternatives. If your roof is damaged, we won’t replace something that wasn’t there, like a solar panel, but we might use wood materials that come from responsibly managed forest or we could give you a higher-grade roof shingle so it lasts longer.” In general, says Valzania, the company will pay about 25percent over the total replacement costs to equip a home with greener alternatives. If a homeowner suffered a total loss and was insured for $400,000, for example, the policy would go 25percent above—or $100,000—beyond that figure for green improvements. Consumer Costs What are the actual costs of green insurance for the consumer? It’s tricky to generalize something like that, Valzania says, because every situation is different. But as a guideline, he says, Lexington’s green insurance policies run “a couple of percentage points” higher premium-wise than convention policies would for the same home. But he’s also quick to say this isn’t because they’re just cashing in on the “green” label. “We’re trying very earnestly to provide some meaningful coverage to people,” he says. “This is not a gimmick. I think we’re taking a lot of risk on ourselves right now because there’s not a big body of evidence you can study to see how much you should charge for this.”

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