How Energy Efficiency Upgrades Reduce Insurance Risk

by ‐ Tags: property management, building science

The obvious benefits of going green just keep adding up for building owners and property managers, among others. But here are just a few ways energy efficiency and other green updates for your apartment building double as factors that could help lower your multifamily building insurance premiums:

A sustainable roof is less susceptible to weather damage
Building owners who choose to update their roofs with sustainable materials qualify for big points toward Leadership in Energy and Environmental Design (LEED) certification, plus they could score major points with their insurance companies.

 

For example, a metal roof scores high in regards to recycled content and total recyclability/energy efficiency as well as ranking as one of the most durable roofing materials on the market. Therefore, in addition to building a cooler, more efficient roof for your building, this green update helps reduce the likelihood that you’ll have to file an insurance claim for weather damage and other perils. Typically, this reduction in risk translates into big savings for green policyholders.

Updating your plumbing helps prevent burst pipes
In order to be LEED-certified, building staples such as toilets and water heaters must adhere to new energy and water-efficiency standards. Conveniently, insurance carriers also offer rewards for updated plumbing systems: A building owner or property manager who has replaced old pipes and out-of-date water systems is considered a much lower risk for water damage claims and therefore typically qualifies for a lower commercial property insurance premium.

Efficient electrical systems reduce the risk of fire
Generally, newer electrical systems that qualify for LEED efficiency points are safer and pose a significantly lower risk for insurance claims than older systems. In fact, the majority of fires can be attributed to electrical malfunctions in systems that are out-of-date and not in compliance with current standards. With the average fire-related insurance claim coming in at nearly $30,000, the risk reduction that comes with a new, efficient electrical system is a big money-saver for green building owners.

A new HVAC system helps protect you against seasonal hazards
LEED requires a high level of efficiency in regards to heating, ventilation and cooling. Green buildings that use sustainable materials are typically designed to be easier to cool in the summer and retain heat in the winter. Since the HVAC systems in these buildings typically don’t have to work as hard in order to maintain comfortable temperatures as systems in older, less efficient buildings, they’re also less likely to break down and cause fires and freezing pipes. Additionally, as with many of the features above, insurance carriers view newer, updated systems as lower risks for claims. That translates into savings when setting premiums.

When you update a building with green features, you’re not just increasing energy efficiency. You’re improving your living conditions, cutting costs of utilities and other resources and making the building a safer place to live. These awesome benefits also conveniently translate into savings on insurance.

This article was contributed by Carrie Van Brunt-Wiley, Editor of the HomeInsurance.com blog. Carrie has been writing insurance news and consumer information for HomeInsurance.com since 2008.