Insurers are increasingly offering insurance discounts if you already own an environmentally friendly home or car as well as additions to standard policies that cover the costs of going green when renovating after a loss.
Pain point and how is it solved:
New policies will pay to rebuild a home using green materials after it's destroyed by fire or other disaster, and offer discounts if you buy a hybrid car or limit driving. Green insurance is not just a good idea, it’s potentially a revolutionary idea.
A major pain point would be the cost involved in building a ‘green home’. Not many people would be financially strong to set up a green home. Though home owners who really like to preserve the natural environment really love this concept, they still cannot afford to upgrade their houses. Several people are ready to pay extra for green insurance plan in order that if their house is destroyed, at least they could get the best out of it.
At this stage, they seem more of a marketing kind of play for the insurance companies because going green is in. The real bottom line for consumers is that the chances of you using the policy rider or needing it in a significant way are pretty slim so you wouldn’t want to pay a whole lot more for it. With green insurance so new, there’s no track record for how much companies should charge for such policy riders
Any individual who drives an eco-friendly vehicle or owns a house built from green materials is eligible to avail Green Insurance.
So far, only a handful of policies are available, and most are sold only in selected places. By proper awareness and exposure, insurers may be able to introduce such policies in large scale.
Types of policies available at present:
Auto: Discounts for Hybrids
Travelers, Farmers and others take upto 10% off
Auto: Discounts for Paperless Billing
Allstate Green Policy offers a 2% discount for e-billing: $30 is donated to green causes
Auto: Discounts for Driving Less
GMAC, Progressive, Farmers and others reduce premiums upto 54%
Lexington and Fireman’s Fund pay to rebuild with sustainable materials for an extra 2% to 3%
Source: Business Week Magazine
Some insurance companies are backstopping warranties on solar panels, or protecting against lulls in the wind needed to drive turbines. This is helpful to start-ups whose customers can rely on guaranteed performance. These types of policies can also help to make project financiers feel more secure. The number of companies offering warranty insurance policies is growing quickly, from only a few a year ago, to approximately 12 companies today.
The green insurance industry can expect meteoric growth in the next five years, particularly as the government introduces green energy mandates.
Lexington Insurance Company was one of the first few companies in the world to introduce “EcoSurance.” The company offers two green insurance options – Upgrade to Green and LexElite Eco-Homeowner.
The Green Insurance Company, based out of UK, provides green insurance in the verticals of vehicle, pet and home insurance.
A List of Green insurance companies that provide green home insurances are:
- Fireman’s Fund Insurance Company
- Liberty Mutual
- Travelers Insurance
Insurance companies can find their niche in cleantech.
The insurance industry is jumping on the eco-bandwagon. After consumers drink their shade-grown coffee, slip on organic-cotton clothing, and stock up on environmentally friendly household products, they can now buy "green" policies that cover the house itself—and the car in the driveway.
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