Environmentally-Friendly Insurance:

Going green with insurance may put green back in your wallet

Sustainable trends are sprouting up in every aspect of life as consumers are digging new technologies and down-to-earth ways to reduce their carbon footprint. If you are contemplating changes to help protect the environment, the National Association of Insurance Commissioners (NAIC) suggests you protect yourself by considering how those environmentally-friendly changes could affect your insurance needs.

Auto Insurance

Driving Less, Saving More

If you are taking steps to drive less, you could also be saving money. According to the U.S. Department of Transportation, the average American drives nearly 13,500 miles per year. Many insurers use your mileage as a factor when figuring your auto insurance premium. If you are driving less, let your insurer know. You may be eligible for a low-mileage discount.

Also known as telematics, usage-based insurance (UBI) uses technology to track driving habits through smart phones or devices installed in a vehicle. Allowing an insurer to monitor your mileage and general driving behavior can result in lower premiums. These types of programs are not available from all insurers or in all states, nor are they limited to hybrid car owners. Ask your agent what options are available to you.

Be honest when you apply for a new policy or visit with your insurer about your annual mileage. Underreporting your mileage can cause trouble down the road. When reporting a claim, insurers can check your mileage. A discrepancy between your actual mileage and your policy application can void your coverage. Always be truthful with your insurer.

Park and Ride

If you live in a large urban area, you may consider "park and ride" – where you drive your car to a local lot and leave it parked during the day, taking public transportation for the majority of your commute. This could provide savings on your premium.

If you dramatically cut the number of miles you drive in a year, your insurance company may be willing to re-rate you at the lower mileage. Call your insurance agent or insurer about any changes to your commute to see if your premium may be adjusted.

Also ask your insurer about other insurance risks such as coverage for any damage that happens while your car is parked in the lot and whether your homeowners or renters policy covers personal belongings left in the car in the event of a break-in.

Buying a Hybrid Vehicle

If you've made the investment and commitment to burn less fuel when driving, check with your insurance agent to see how your new green machine is going to affect your policy.

Some insurers offer premium discounts of up to 10 percent for hybrid vehicles. This is a great deal, but be advised that insurance rates for hybrid vehicles tend to be higher due to higher repair and replacement costs associated with hybrids. You may want to check your state tax laws to see if any incentives are available for owning a hybrid vehicle.

Some insurers also offer alternative fuel discounts for cars that use energy sources like electricity, hydrogen, natural gas, ethanol or biodiesel.

The coverage provided by a standard auto insurance policy is the same for a hybrid as it is for a standard vehicle.

Renting a Hybrid Car on Vacation

If you're considering a hybrid rental car for your summer vacation, don't forget to check on the insurance. If you have an auto insurance policy, it's possible it will extend to the rental car, so read your policy before you consider this coverage at the rental counter.

Coverage for a hybrid should be the same as for a standard vehicle, but you should check just in case. Ask the car rental agent if the accident coverage they offer is specifically for the hybrid, and then call your auto insurer to see if your policy has limitations for hybrids.

Car Sharing

If you're a city dweller who's given up a car all together, you may be thinking about using a car share plan for those times when you really need a set of wheels for errands. Car sharing companies offer their members the flexibility of picking up a car for a one-way trip, roundtrip, a couple of hours or a full day. Generally, membership is required to use these types of services.

Insurance coverage is generally included in the cost of using car shares. In most cases, this will include at least the state minimum liability and property damage for the car. But be prepared to pay a fee if you're in an accident and the car is damaged. The details of your coverage may vary from state to state, so review the rules of the car share company before your trip.

If you are planning to use a ridesharing company like Uber or Lyft, take time to understand your insurance risks before you get in the passenger seat.

Drivers who don't own a car, but drive occasionally may consider a non-owners liability insurance policy. This type of policy covers the named policyholder when driving, whether it is a friend's car or a car share. Typical policies will cover some or all of these: liability (financial responsibility when you hurt someone else), Uninsured/Underinsured Motorist Protection, Personal Injury Protection (PIP) and Medical Payments coverage. Non-owners liability insurance generally does not cover any damage to the car.

Homeowners Insurance

Green Homeowners Insurance

For homeowners striving to meet the U.S. Green Building Council (USGBC) or LEED® certification, checking your insurance policy to make sure you're covered is an important step in the planning process. A standard homeowners insurance policy might not cover the costs of replacing green upgrades made to your home. Confirm your homeowners policy specifically provides replacement so that you won't have to pay out-of-pocket costs to reach those same standards. A green homeowners policy covers either the actual cash value or replacement costs of rebuilding a certified green home or upgrading a standard home to a green standard.

Some policies will allow you to repair your home using green materials, but will have a cap on covered costs. Others may exclude coverage of items such as fees charged by inspectors for having your home certified or re-certified as green. In the event of a total loss, the coverage may also pay for environmentally sensitive demolition and debris removal.

The terms and prices offered on green policies may differ from insurer to insurer. Make sure to get several quotes and ask questions about any limitations on what is covered, how rebuilding costs are figured and what it takes to be eligible for green coverage.

Solar Panels and Wind Turbines

If you are considering adding solar panels or a wind turbine to your home, it's important to check with your homeowners insurer before making the modifications. Some insurers are now extending homeowners coverage to these green renovations, but not all insurers offer the coverage. In some cases, the addition of solar panels or a wind turbine can significantly affect the cost of your insurance policy. Before you install either, call your state insurance department to see what your legal obligations are for insuring them. Then call your insurance agent or insurer to see if they will extend coverage to the additions. If they don't, your state insurance department can tell you if there's an insurer authorized to offer the coverage in your state

If you are considering selling any excess energy from your solar panels or wind turbine, you may have specific insurance obligations before setting up the transfer.

More Information

For more information about auto and home insurance policies, including green policies, check with your state insurance department.

To find out more about the coverages in a basic auto or home insurance policy, go to www.InsureUonline.org.

About the NAIC

The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally. NAIC members, together with the central resources of the NAIC, form the national system of state-based insurance regulation in the U.S. For more information, visit www.naic.org.

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