Major insurance companies including Travelers and ACE  are doing their part to encourage green building practices safe for the environment and as it turns out, great for the insurance businesses.

Fireman's Fund Insurance Company is leading other national insurers in enhancing property coverage for buildings that covers green and low impact building practices. For example, if a building contains low volatile organic compounds (low-VOC) paint, a recycled water system, a green roof, or recycled materials, the policy covers replacement costs for those green contents should the property be damaged. This protects those businesses making the investment in environmentally conscious construction and building operation.  Additionally, for non-green buildings, insurance policies are also covering green replacement and/or upgrade costs to any damages the building may sustain. Should the building incur water damage, for instance, a policy may allow an owner to replace damaged insulation, dry wall and paint with safer, environmentally appropriate alternatives.

Insurance companies are learning that green buildings have fewer claims related to harmful heath conditions as a result of the building’s materials than do conventional, non-green buildings. Case in point: buildings constructed with carpets that emit VOCs known to cause headaches and other ailments for building occupants. At the end of the day, the insurance company saves money by not having to process and pay on claims and the insured maintain office productivity.

Fireman’s Fund was the first insurance company to offer a green building -focused policy beginning in 2006. They currently offer a discount on green policies for those buildings LEED (Leadership in Energy and Environmental Design) certified under the U.S. Green Building Council. These buildings represent the cutting edge in environmental design maximizing natural lighting, recycled materials, native vegetation, efficient use and distribution of water and energy supplies, and other materials that are safer for people and the environment. Building green means less waste, less harm to those who frequently occupy the building and less risk for insurance companies.

While the green policies can have higher premiums, after investing in a green building, and particularly those buildings that have been processed through the expensive LEED certification system, owners want and need to protect the investment and seem to be willing to do so even if it means higher insurance costs. ACE Environmental Risk Senior Vice President, William Hazelton notes, “[owners] might be putting more into the building now, but on the resale side later, they’re going to be a considerably better investment because they’re up-to-date and they the best technology” as property value for green buildings remains high.