Save on Insurance by Going Green

You may be able to help save the environment and save money on homeowners' insurance and auto insurance at the same time. Here are three ways to get insurance discounts for going green.

Save on Energy-Efficient Buildings

Some insurance companies offer homeowners' insurance discounts on green homes. Green homes usually are defined as those with Leadership in Energy and Environmental Design or LEED certification. The LEED rating system evaluates homes based on design, construction and operation relative to established and widely accepted green standards. To obtain LEED certification for your home, you must have third-party verification from an accredited LEED professional that it meets strict LEED standards. The rationale for offering premium discounts on green homes is that they are more resilient and safer than conventional homes and that they are more energy efficient, which can contribute to reduced losses and claims.

Even if your current home does not qualify for LEED certification, some insurance companies (including Fireman's Fund) offer policies with a green upgrade that covers the cost of green construction. For example, in the event of a total loss, a Fireman's Funds' homeowners' insurance policy with a green upgrade may pay for environmentally sensitive demolition and materials removal, rebuilding to LEED standards, replacement of appliances with ENERGY STAR products, and installation of energy-efficient lighting, building materials, roofing, plumbing and heating and cooling systems.

Buy a Hybrid Vehicle

Some auto insurance companies offer premium discounts on hybrid vehicles based on the rationale that hybrid owners may be more conscientious and, therefore, lower-risk customers.

Choose a Pay-as-You-Go Auto Insurance Policy

Premiums on a pay-as-you-go or low-mileage auto insurance policy are based in part on the number of miles driven. Policies vary, but premiums may be based on a specified range of miles driven, actual miles driven, or other variations (sometimes including hours driven and driving style). While premium savings on a pay-as-you-go policy are difficult to estimate since they depend on a variety of factors, including individual driving patterns, they can at times be significant (as much as 50% or more).

While a pay-as-you-go policy isn't right for everyone, it might be ideal for you if you drive infrequently and/or for short distances and, therefore, don't rack up many miles each year, you expect to continue to put relatively few miles on your car each year, and you care about the environment (since driving less uses less fuel and, therefore, contributes less to greenhouse gases).

One downside to the pay-as-you-go policy is a loss of privacy, since the auto insurance company will monitor your driving and may be able to tell not just how many miles you drive, but when you drive and how you drive.

Sources:

Jilian Mincer and Shelly Banjo, www.filife.com, Going Green Brings Insurance Discounts: FiLife (a WSJ partner)

Kristin Abraham, interiordecorating.suite101.com, LEED and REGREEN Certification: Adding Eco-Friendly Touches to Your Home

www.firemansfund.com, Fireman's Fund: Optional Green Upgrade Coverage for Prestige® Home Premier