With the flash of a fire or the rising waters of a flood, your hard work in the green arena could be gone. Traditional insurance policies may not replace all of your expensive green equipment or pick up the tab for your LEED recertification when you rebuild.
That is, unless you backed up your improvements with green insurance.
What's Out There?
Green insurance offerings are rapidly multiplying. As sustainable practices become a requirement instead of an option, the commercial insurance industry is increasingly tailoring some of its offerings to earth-friendly facilities.
In part, insurers are coming to view green buildings as lower risks, especially if the structure has attained certification with LEED, ENERGY STAR, or local green organizations.
"The most common cause of a loss is fire from electrical problems and water damage from plumbing or roofing issues," says David Cohen, senior director of real estate business for the commercial insurance side of Fireman's Fund. "An integral part of LEED is commissioning. An engineer comes out and makes sure all the building systems were installed correctly. If equipment is operating as efficiently as possible, it will break down less often. Fewer breakdowns means fewer insurance claims."
A couple dozen companies offer some kind of insurance coverage for facilities making environmentally friendly efforts, whether it's an endorsement on a traditional policy or a separate policy specifically dealing with green issues.
Owners and managers of existing buildings must take extra care with these policies because adding new features to an existing building can introduce new risks to the structure, which also must be addressed before hammering out the details on a green insurance policy.
Covering a roof with solar panels, for example, adds extra weight and could cause complications for the local fire department, who must be able to access and ventilate the roof if there's a fire. If you're going the vegetated route for your roof, be sure you're guarding against potential water intrusion and mold.
"There's a lot to think about when you're going to retrofit green," says John Ingram, vice president of ESIS, Inc., a division of ACE USA. "When a company decides to go green, it's not just a matter of installing solar panels on your roof. There are engineering standards, aesthetic issues, and return on investment questions that must be fully vetted before a project of that magnitude is considered."
Will It Really Help?
Green policies and endorsements have become extremely viable for facility managers trying to invest in the future. Facilities likely to cherish their green coverage include:
- Buildings that are already green-certified: Whether it's LEED or another system, applying for certification and hiring a professional to examine and commission the building isn't free. Green insurance would protect the investment you already made in getting the building certified and pay for you to achieve at least the same level you had before a loss.
- A traditional building with no green features: Regulations and building codes are increasingly requiring greener construction. Covering a non-green building with green insurance ensures that you can rebuild greener and create a more efficient facility if you suffer a heavy loss with your traditional building.
"It's genuinely very inexpensive to add upgrade coverage, so you're receiving a lot of sleep-at-night, future-proof-type coverage, and making sure you have energy-efficient buildings going forward," Cohen says. "It's going to make your building more attractive to tenants. In my mind, everyone's a good candidate, whether or not you've got a certified building."
Some companies, including Fireman's Fund and ACE, also offer consulting services to policyholders who are mulling sustainability and efficiency options. These professionals can examine your unique situation and tailor their recommendations to what will keep your properties safe without breaking the bank.
From then on, it's just a matter of carving out your own green path.
Janelle Penny is associate editor of BUILDINGS.