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"Green" home insurance will pay for environmentally friendly repairs

green home insurance If you're concerned about the environment and believe in leading an eco-friendly lifestyle, "green" initiatives may be coming soon to your home insurance policy. At least two large insurance companies have already started offering "green products."

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Fireman's Fund Insurance Co., based in San Francisco, was the first insurer in the nation to launch a green insurance policy for homeowners last year. It's now available in 35 states and Washington, D.C. State Farm Insurance started going "green" this year. Its products are available in 27 states (see sidebar for each company).

While similar policies have been available to businesses since 2006, now homeowners can jump on the green insurance bandwagon.

"We believe this is a trend-setting insurance solution for homeowners who are interested in the many benefits of 'going green' at home" says Donald Soss, chief underwriting officer for Fireman's Fund.

For a few dollars more

Where you can buy "green insurance"

Farmers Insurance offers the product in the following 27 states: Alabama, Arizona, Arkansas, California, Colorado, Idaho, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin and Wyoming.

Fireman's Fund offers green insurance in the following 36 states: Arizona, California, Colorado, Connecticut, District of Columbia, Delaware, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Missouri, Nebraska, New Jersey, New Mexico, Nevada, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin and Wyoming.

 

For an additional $25 to $75 per year (depending on the insured value of your home), a customer can buy coverage that will pay for upgrades to a home using eco-friendly means and products in the event of damage or destruction. That could include replacing heating, cooling and electricity systems, appliances, roofing and flooring with eco-friendly materials (commonly called green materials).

The covered upgrades include also water-saving plumbing fixtures, non-toxic and low-odor paints and carpeting, as well as Energy Star-rated appliances. Ceilings, siding and framing would be replaced with Forest Stewardship Council certified wood (including bamboo flooring). To oversee the rebuilding of the home, Fireman's Fund will also pay up to $25,000 to hire an architect that has earned a Leadership in Environmental and Energy Design (LEED) status from the U.S. Green Building Council. During cleanup, the insurer would dish out up to $25,000 to recycle debris and divert it from a landfill.

Janet Ruiz, spokesperson for Fireman's Fund, says that if you already own a LEED-certified home, you'll receive a 5 percent discount on your premium. But you don't need to own a LEED-certified home to buy the green policy. Anybody can upgrade a Fireman's Fund home insurance policy to green by purchasing an annual endorsement. The price of the endorsement is based on the value of your home. For example, if you own a $1 million home, you will pay an extra $75 a year to guarantee green repairs.

But that doesn't necessarily mean that Fireman's Fund will pick up the entire cost for converting your home to green standards in the event of a disaster. It will pay up to 10 percent more than the value of the items destroyed. If your bamboo flooring will cost 20 percent more than the value of your old floor before damage, you will pick up the rest of the bill.

Color me green

To go green, you upgrade your homeowners insurance by buying an annual endorsement. The price of the endorsement is based on the value of your home:

$1 million home = $75

$500,000 home = $35

Minimum cost = $25

 

According to a 2007 Fireman's Fund study, the people most interested in green insurance are affluent. In California, surveyed people who showed the most interest own homes valued at $1 million or more and have a minimum of $125,000 in disposable income or liquid assets. Elsewhere in the nation, those who showed the most interest own at least a $700,000 home and had the same assets as those in California.

"Our target market for homeowners is affluent and high net worth," Ruiz says. The company's research shows that these homeowners are more likely to incorporate all types of green practices into their homes — probably because they can afford it. According to the National Center for Healthy Housing, green homes use less energy, water and natural resources and create less waste. Besides being better for the environment, building green homes is also touted as a personal health benefit. The organization reports that "green" residents may experience better overall health as a result of reduced exposure to mold, mildew and indoor toxins.

Wave of the future?

Competitors have been watching the "green" trend.

"We are not offering these policies at the present time, but that doesn't mean that we wouldn't in the future," says Dick Luedke, spokesperson for State Farm Insurance.

Allstate says it will likely examine green initiatives for homeowners — and that could include something similar to the Fireman's Fund green policy. "We are definitely looking at it," says Raleigh Floyd, spokesperson for Allstate.

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