Going Green? Make Sure Your Insurance Covers Your Environmentally-Friendly Decisions
Recycling, solar panels, hybrid cars and carpooling are more common than ever. But the sustainable actions you are taking to reduce your carbon footprint might impact your insurance coverage—sometimes saving you money.
TOP CONSIDERATIONS
Auto Insurance
Going green with auto: There are several ways you can make your driving habits more sustainable which also may save you money on your insurance.
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Driving less. Many insurers use mileage as a factor when determining auto insurance premiums. If you are driving less, you might be eligible for a low-mileage discount.
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Park and ride. If you are driving your car so you can take public transportation and this is the majority of your commute, you may dramatically cut the number of miles you drive in a year. Your insurance company may be willing to re-rate you at the lower mileage.
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Drive a hybrid vehicle. Some insurers offer premium discounts for hybrid vehicles and alternative fuel discounts for cars that use alternative energy sources like electricity, hydrogen, natural gas, ethanol or biodiesel. However, insurance rates in general for hybrid vehicles tend to cost more due to higher repair and replacement costs.
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Car sharing. There are now companies—that offer you the flexibility of picking up a car when you need it. This is called car-sharing. When using car-sharing, insurance coverage is usually included in the cost. In most cases, this will include at least the state minimum liability and property damage for the car. Many car-sharing companies will generally charge you a fee if you are in an accident or if you damage the car.
Homeowners Insurance
Going green in the home:
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Standard or non-green homeowners insurance generally provides coverage for either the actual cash value or replacement value of your property with standard building materials.
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A green homeowners policy covers rebuilding a damaged home to green standards. These policies generally cover the costs of environmentally friendly materials and low environment-impact processes, as well as energy-efficient replacement products and materials. In the event of a total loss, the coverage may also pay for environmentally sensitive demolition and debris removal.
Saving money with green homeowners insurance: Green renovations may help lower your costs on utility bills and your taxes. They may even lower the premiums on your homeowners insurance. If your entire home, or your home repair, is certified to meet certain standards, check with your insurance agent or company to see if you’re eligible for extra discounts.
Green Energy Insurance
Selling excess solar or wind energy to a utility company: Interconnection or net-metering allows you to sell energy overages to a local utility company. Most government bodies either require or strongly encourage homeowners to acquire and maintain additional liability insurance while an energy contract is in force. Be aware that municipalities might require you to reimburse for any loss arising out of net-metering incidents that harm their workers or damage their property.
THINGS YOU SHOULD KNOW
Auto
Consider the benefits and risks of park and ride: Though you may be cutting down your mileage, leaving your car parked in a lot could expose it to other risks such as damage to the vehicle or theft. Ask your insurer if you are protected for these incidents or if you should explore additional coverage.
Have the right coverage for a hybrid: Check with your insurer to see how a hybrid vehicle will impact your policy. You might be eligible for discounts, but the premium might increase due to higher repair costs.
If car sharing with any frequency, consider a non-owners liability insurance policy: This type of policy covers the named policyholder when driving, whether it is a friend’s car or a car share. Typical policies may cover liability, uninsured/underinsured motorist protection, personal injury protection, and medical payments coverage. Non-owners liability insurance generally does not cover any damage to the car.
Homeowners
Confirm coverage: Each policy is different, so make sure it covers what you need. For example, if you have a standard homeowners policy it might not cover the cost of replacing the green upgrades you made to your home, leaving you to pay for these expenses out of pocket.
Shop around to find the best value: The terms and prices offered on green policies may differ from insurer to insurer. Get several quotes and ask questions about limitations on what is covered, how rebuilding costs are figured and what it takes to be eligible for green coverage.
Explore policies that allow you to make green upgrades: You may be able to purchase a homeowners insurance policy that allows you to increase your home’s green factor following a loss. A few companies also offer policies that allow you to purchase additional insurance before damage occurs to ensure that extra funds are available to make those green enhancements, such as improving the energy efficiency of your home or using sustainable resources.
Check with your insurer before adding solar panels or wind turbines: Some insurers are now extending homeowners coverage to these green renovations, but not all. In some cases, the addition of solar panels or a wind turbine can significantly affect the cost of your insurance policy. Before you install, find out what your legal obligations are for insuring them. Then call your insurance agent or insurer to see if they will extend coverage to the additions. If they don’t, find an insurer authorized to offer coverage in your state.
TOP THREE THINGS TO REMEMBER
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Tell your insurer about any green decisions you make that could impact your auto or homeowners insurance policies. You may be eligible for discounts.
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Review your current auto and homeowners policies to see if they cover green upgrades. If not, contact your insurer to discuss these changes.
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When seeking green energy related discounts, contact your municipality about insurance requirements and consider additional liability coverage.
About the National Association of Insurance Commissioners
As part of our state-based system of insurance regulation in the United States, the National Association of Insurance Commissioners (NAIC) provides expertise, data, and analysis for insurance commissioners to effectively regulate the industry and protect consumers. The U.S. standard-setting organization is governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer reviews, and coordinate regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally.