Homeowners can save by going green

Linda Melone

Electric and hybrid cars put green cars on the map with the promise of fuel economy and a cleaner environment. For ecologically minded homeowners, a new study shows that green improvements to homes not only help the environment, but also can add value.

Another benefit: Homes that meet strict green standards may qualify for insurance discounts. However, the overall impact of going green remains to be seen as far as homeowner's insurance is concerned, says Ron Reitz, president of the National Association of Public Insurance Adjusters.

Home insurer Fireman's Fund does offer a 5 percent discount on its higher-end coverage for LEED-certified homes.

Fireman's Fund says that if a green home is damaged by a storm or other covered disaster, its green coverage will pay to replace environmentally friendly materials with materials that meet current certification requirements. As for a traditional home, a Fireman's Fund policyholder can buy a green "upgrade" that would pay to rebuild the house with energy-efficient materials and appliances.

Bruce Robins, president of Robins Insurance Agency Inc. in Tennessee, says that if green homes eventually lead to fewer home insurance claims or claims that are less severe, more insurers may end up providing discounts for these homes.

Although no studies have been done on the cost differences between construction for green and non-green homes, studies commercial buildings indicate that green construction costs either match or only slightly exceed those of non-green commercial buildings, says Janine Kubert, a spokeswoman for Build It Green, a nonprofit organization that promotes energy- and resource-efficient homes in California. The group works with builders and homeowners to certify homes as GreenPoint Rated.

The value of green

The study about the value of green homes looked at 1.6 million single-family homes sold in California between 2007 and 2012. It was conducted by researchers at the University of California, Berkeley, and the University of California, Los Angeles.

The study found that a certified green home sold for an average of 9 percent more than a non-green home. Based on the average California home price of $400,000, green homes sold for an average of $34,800 more.

About 4,300 of the homes in the study were certified as green by Energy Star, GreenPoint Rated or LEED Leadership in Energy and Environmental Design Green Building Rating System). All three of these systems are recognized as environmental standard-bearers in the building world.

"Green homes emphasize quality construction, beauty, comfort, and health — the health of people as well as the health of the planet," Kubert says.

Building codes

If you own a green home and sustain any type of insured loss, you must comply with local building codes when rebuilding it, Reitz says. He advises upgrading your homeowner's insurance so that if you do experience a loss, any increased cost of construction will be covered.

If you don't include a building-code upgrade in your policy, you won't be covered for repairs necessary to return your home to the green standards. And if your place isn't insured as a green home, you might not be fully covered in case of damage. Reitz advises homeowners to be upfront with their insurers about having green homes.

"If your home requires more coverage, the difference in premiums to go from $200,000 to $500,000 worth of coverage is approximately $30 more, but the coverage is exponential and well worth it," Reitz says.

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