Need for Commercial “Green” Insurance Policies Rising

Client demand for green insurance coverage will continue to rise as the U.S. Green Building Council predicts that the market for green construction projects will double by 2013, creating a whole new genre of insurance coverage with unique requirements.

As with any coverage assessment, the initial goal is to arrive at an appropriate value estimate for the building to be covered. Many of the features of green buildings, however, are not covered by or considered in standard commercial property insurance policies.

Companies seeking to reduce the amount of materials sent to local landfills with concurrent recycling and rebuilding or remodeling work will want a green policy endorsement. This will help offset the cost of the recycling and limit liability in the event of a covered loss.

Additionally, green policies will provide extra compensation for policy holders to restore damaged portions of their property to both meet code compliance and to opt for green materials and construction. In most cases,environmentally sound, energy efficient alterations actually go beyond code requirements, but can significantly increase the cost effectiveness of the finished structure.

Green endorsements also help to defray the costs of business interruption during periods of restoration since incorporating environmentally friendly materials into any construction project usually lengthens the work period involved.

These and other considerations of green building will be increasingly important, according to the Green Building Council’s findings and will necessitate more vigorous negotiation of and research into commercial property insurance policies.