Fireman's Fund Insurance Companies Offers Discount for Green Buildings

A new insurance program is available that offers commercial building owners discounts for green, sustainable buildings. Novato, Calif.-based Fireman's Fund Insurance Companies developed certified green building replacement and green upgrade coverage, which applies to buildings that are green-certified, as well as buildings and facilities whose owners would like to capture green benefits. Fireman's Fund worked with the U.S. Green Building Council's (USGB) LEED program and the Green Building Initiative's (GBI) Green Globes program to ensure its coverage and upgrade options align with the industry's major green certification programs.

"Our discount applies to the completed, certified green building," says Steve Bushnell, product director for Fireman's Fund. "We do not offer a discounted price for the builder while the building is under construction. The certified building discount (5 percent) is the same for all LEED ratings, and is based largely on commissioning which is a prerequisite for any LEED certification." Under the program, commercial property owners and managers can receive insurance discounts for rebuilding and/or replacing building materials with green alternatives, including glass.

"Glazing is a key component of energy-efficient and green buildings," says Bushnell.

"We will insure glazing and, following a covered loss, pay to replace the glazing in any building with materials comparable to those in place prior to the loss. We recognize that glazing is part of the overall building envelope and works in conjunction with the rest of the envelope system and HVAC system to produce an energy-efficient building. We did not include glazing in our upgrade form recognizing that you cannot replace 'ordinary' glazing with 'green' glazing and not make modifications to the HVAC as well."

Through the program, Fireman's Fund will pay for the application process for the building to become certified by either the USGBC or GBI. For green buildings, the program covers sustainable building elements, such as certain glass products, and in case of total loss, will cover for rebuilding to be green certified.

Bushnell says Fireman's Fund realizes several benefits from this program, including a view that green buildings are better insurance risks (safer) than traditional buildings. "Our most frequent cause of loss for commercial real estate is electrical fires, followed by plumbing and envelope water leaks and HVAC issues," he says. "Commissioning addresses all of these systems. We anticipate that we will pay [fewer] losses for green buildings than traditional buildings."

He also says green buildings make good business sense. "We believe that green buildings are now mainstream. Industry literature makes a convincing case that green buildings produce higher net operating income, have higher asset value, produce a healthier, more productive indoor environment and are more attractive to tenants than traditional buildings. These factors make them better insurance risks."

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