With all the attention being paid to health insurance issues these days (no comment on the premiums being paid), we wouldn’t want to ignore some new developments in green building insurance. This post will focus on builders risk insurance, which (as most of our audience knows) is typically required by lenders as a precondition to construction financing and basically covers the risk of loss to a building while under construction.
Unfortunately for green builders, traditional builders risk insurance does not cover existing buildings undergoing green renovations due to certain unique exposures with respect to potential loss of income and additional expenses.
But several carriers are now offering products that expand upon traditional builders risk coverage. For example, Fireman’s Fund offers a green amendment to its builders risk coverage that essentially broadens coverage for loss of earnings. In addition, Fireman’s “Green Upgrade Coverage” provides for replacement of standard systems and materials with green ones in the event of a loss. Caveat: our green insurance insiders report that Fireman’s Fund is renowned to be on the pricey side.
A more economical option could be the new green builders risk endorsement offered by Zurich. Coverage extensions offered by Zurich can include payment of expenses associated with, commissioning (or re-commissioning), clean-up, sorting, segregating and transporting of recyclable debris, actual losses sustained by loss of LEED® certification, reasonable expenses incurred to retain LEED® AP’s for design, repair, replacement or rebuilding of damaged property, and registration and certification fees charged by the U.S. Green Building Council to recertify real property.
In addition, Lexington Insurance last year unveiled its “Upgrade to Green” endorsement, which extends coverage to address risks during three key areas of construction (project management and administration, site ecological impacts, and consumption of resources). This endorsement offers coverage for fees of qualified professionals associated with building design and restoration, as well as costs of re-commissioning building systems and replacing vegetated roofs.
After what some say was a rather slow response by insurers, there have been a good number of new green building insurance-related offerings. We at the OGBL will continue to monitor and report on current developments and trends.
The protection offered by building and contents insurance, can cover a expensive home and all of its contents against a huge range of risks, but if you are one of the many people struggling to afford the mortgage that comes with a new home your first home then there are various government initiatives to help, it is easy to find them.
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