As a building developer/owner you invest a lot of money in building a LEED certified project. Has your broker discussed the potential gaps in a traditional property insurance policy versus a policy enhanced to include the ‘green’ endorsement now offered by many carriers?
Most people involved with the real estate industry are aware of LEED certified status and what is required to meet that status. What you may not be contemplating is how the status will impact your insurance program, both short and long-term on a given project or building. There maybe an assumption that because a LEED certified building is typically built to meet their very rigorous standards, insurers would provide some credit or reduction in premium for a LEED certified building. Unfortunately, because the insurance industry uses historical statistics to forecast losses and develop premiums, most do not feel there is enough reliable data on LEED certified buildings to provide any form of credit or reduction.
We have seen increasing pressure to build or convert existing properties into LEED certified buildings. As owners and developers you should have some perspective on how insurance companies are responding to this growing issue and what it can mean in the event of a property loss. In the last few years most property carriers have developed either a ‘green’ policy form or endorsement to address items not included in the traditional policy form.
At a minimum your broker should be discussing the following items with you as part of any regular discussions. The traditional property policy is designed to rebuild the structure as it existed prior to a loss using traditional construction methods. The challenge in dealing with a LEED certified building is that some of the materials and construction methods are more expensive than in a traditional construction project.