Can insurers protect against these risks?
Many property and liability insurance companies have begun developing specialized policies to cover the unique risks corresponding with LEED construction projects.
Obtaining property insurance for existing LEED-certified buildings can insure these additional costs:
- Low-flow plumbing fixtures such as toilets, waterless urinals and other efficient plumbing systems.
- Energy Star appliances, lighting, HVAC and electrical systems.
- Environmentally friendly materials such as carpeting, furniture and wall partitions.
- Sustainable materials such as bamboo for flooring, furniture and millwork.
- Use of other recycled materials.
- Replacement of vegetative roofs and drainage systems.
- Removal of debris from a fire or other loss in an environmentally responsible way.
- Payment of fees to a LEED-accredited professional to oversee construction.
- Monitoring of heating and air conditioning systems to balance airflow.
- Flushing to assure that contaminants in building heating, air conditioning and plumbing systems have been fully removed before tenants occupy the building.
In addition to physical damage losses, LEED property insurance coverage can cover losses such as loss of business income or rents due to the additional time needed to rebuild or regain LEED certification, or building revenue lost due to damage to solar or hydroelectric power sources and potential increased operating costs due to damage to a geothermal heating and power system.
What other types of insurance are there?
Property insurance for builders’ risk/buildings in the course of construction can also be extended to cover the additional costs for LEED construction cited above.
In addition, it will cover the costs of demolition, debris removal and recycling of damaged materials in a sustainable fashion; the additional construction period interest, financing and other costs due to delays in rebuilding while obtaining certification; and the potential prospective loss of rents/delay in completion costs due to delays in regaining certification.
Finally, property insurance coverage for traditional non-LEED-certified buildings can also be purchased to cover additional costs incurred following a fire or other insured loss. This new coverage is essentially a green or LEED building code upgrade endorsement and includes costs to repair or rebuild a traditional building to LEED standards. It also covers extended loss of rents insurance during the recertification process.
Philip Glick is senior vice president with ECBM Insurance Brokers and Consultants. Reach him at (610) 668-7100, ext. 1310, or [email protected].
