One of my very first Green Building Law Update posts focused on the insurance and surety industries' concerns related to green building. Nearly two years later, some in the insurance industry are still expressing concerns regarding green building projects. A recent P&C National Underwriter article highlighted numerous insurance-related concerns related to green buildings:
- Vegetative roofing—using soil and plants to insulate a roof—minimizes the loss of heat in the winter and reduces cooling expenses in the summer. However, the additional weight of soil and vegetation creates structural integrity and collapse potential. Rainwater accumulation adds additional weight to the roofing structure.
- Rainwater runoff in green buildings is often collected in cisterns used for on-site cooling and gray-water systems (that is, waste water—including rainwater—often used for irrigation). But properly channeling the water collection from the roof to the holding tanks might provide challenges beyond traditional gutter systems.
- Alternative energy generation systems common in green real estate—such as solar panels, wind turbines and geo-thermal heating systems—need to be insured properly. Whether property insurance coverage is provided under a commercial property or a businessowner’s policy, specific covered property should include damage to these alternative energy systems.
I often hear from architects, engineers and contractors who want to know what the hold up is in green building insurance and surety instruments.
The holdup is that the insurance and surety industries do not understand the risks associated with this fairly new type of construction. Insurance business models dicatate that insurers do not lose more than is paid out. In order to create green building insurance, you have to understand how often green buildings fail and result in payouts.
Until more green building data becomes available, it will be difficult to create green building insurance and surety instruments.
Is the Grass Greener For Insurers on the Sustainable Side of the Fence (P&C National Underwriter)