Insurance Services Office announced Sept. 14 that it has filed the insurance industry's first standard coverage option for commercial property owners interested in rebuilding damaged property with green alternatives.
Kevin B. Thompson, senior vice president of insurance services at Jersey City, N.J.-based ISO, said the new policy language means "ISO participating insurers will be able to offer their clients an innovative coverage solution that taps into the current desire of many individuals and businesses to lessen their impact on the environment."
Thompson remarked in his statement that, "Today, commercial buildings are among the largest energy consumers and waste generators. Significant attention has been focused on how to reduce the impact of commercial buildings on the environment, and this new coverage is designed to allow insurers to help their clients address that issue."
There are three major components of the new coverage. First, green upgrade coverage will augment existing replacement-cost coverage by providing an additional limit of insurance to address loss settlement of damaged property using more energy-efficient, environmentally preferable materials, products, or methods in design, construction, manufacture, or operation, as recognized by a green standard-setter, such as Leadership in Energy and Environmental Design (LEED) or ENERGY STAR.
The second component is related expense coverage, which provides an additional limit of insurance to be applied to expenses related to green upgrades.
These include waste reduction and recycling costs, such as the reuse or salvage of building materials or contents and related extraction and transportation expenses.
Other expenses include professional fees for the design and engineering of green upgrades as well as certification and equipment testing fees. Related expense coverage also provides building air-out and air-testing expenses.
The third new coverage option offers a business interruption option for those insureds with an underlying time-element policy that extends the period of restoration. This component recognizes that reconstruction using green standards may take longer than is customary with ordinary construction methods and materials, ISO said.
"The ISO green building upgrade will allow insurers to tap into the growing trend of environmentally friendly rebuilding following a loss and is designed to complement the existing portfolio of coverage options available through ISO's commercial property programs," Thompson said.
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