Green Building Insurance and Limiting Exposure

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Slowly but surely, these industries have responded to the demand, and there are a number of products available to green builders and property owners to help limit their exposure in the event of a green building problem.

Green Building Insurance
It appears that Fireman’s Fund Insurance was the first to offer green building insurance products in the fall of 2006. The "Green-Card Insurance Suit" self-proclaims itself to provide insurance solutions to builders and owners whether "you’ve built green from the ground up, have made green renovations to existing buildings, or would like to rebuild as green in the event of a loss."

Quickly thereafter, the Insurance Journal predicted more insurance products to come, and over the next two years Aon, Allstate and Travelers‘ all rolled out their contributions to the green building insurance market.

The insurance policies being offered are interesting in that they protect against green building defects and deficiencies, and in some instances also allow owners to "upgrade" when green building requirements change.

While these experimental programs are exciting for the green building industry, it’s too soon to predict how they will be interpreted, what exact coverages will be allowed, and how they will hold up in the courtroom. Stay tuned…

Green Building Bonds
Contractors and property owners are quite familiar with the concept of "performance bonds." Not so familiar, however, are "green building bonds."

With certain government projects mandating green building standards, and green building requirements finding its way into construction contracts across the country, there is some talk about whether contractors should purchase and file "green building bonds."

The issue of green building bonds and the complex questions surrounding them are discussed in detail in two good posts by the Green Building Law Update blog here. One of the most peculiar presented complexities relates to the general identification of the bond – is it a performance bond, or a license / compliance bond?

With bond requirements popping up through governmental regulations, it seems surety companies are not certain how to exactly issue the bonds.

Once again, like the insurance programs, it’s still too soon to predict how this issue will resolve itself. For now…green builders ought stay tuned.