Innovative Insurance Products Address Green Building Risks

By Teresa O’Dea Hein, Managing EditorNew York—The latest introduction in the growing green marketplace is a primary casualty coverage from AIG Risk Management (AIG), a unit of AIG Commercial Insurance, designed for property owners and managers of green buildings. It consists of two coverages—AIGGreen Reputation Coverage and AIGGreen Indoor Environment Coverage, part of the AIGGreen product line from AIG Real Estate Solutions. This is the first casualty product addressing potential green losses to third parties, Joe Fobert, senior vice president. AIG and practice leader at AIG Real Estate Solutions, based in Tampa. Fla., tells MHN.AIGGreen Reputation Coverage provides up to $50,000 in coverage, per occurrence, for crisis management consultant costs resulting from management of a reputational crisis when a green building experiences adverse publicity. Specifically, AIGGreen Reputation Coverage provides funds to employ crisis management specialists to manage adverse publicity; guide and counsel key company personnel; and provide other necessary services to assist in restoring a company’s reputation.AIGGreen Indoor Environment Coverage protects against claims of bodily injury caused by any substance or odor produced by or originated from a green building’s specialized equipment used to improve air quality or water quality control. While such equipment is critical to green certification, loss resulting from this type of equipment is typically not covered in standard policies, exposing the building owner to a gap in protection.“Across the U.S. and around the world, there has been a growing realization of the value of environmentally friendly and sustainable buildings,” says Fobert. “We recognize that green buildings are a social responsibility and a sound business practice. However, as we enter new territory regarding green buildings, there may be exposures to risks that were never anticipated. AIGGreen offers protection from these risks.”Pre-event and during-event consultation services, which may include crisis planning and response, crisis management and on-site support, are also available under AIGGreen coverage through a leading third-party expert. Plus, if an event occurs, customers have immediate around-the-clock access to green claims specialists who provide such services through The AIG Green Hotline.AIGGreen Reputation Coverage and AIGGreen Indoor Environment Coverage are available as endorsements to AIGRM general liability coverage customers who own or manage buildings that comply with green building standards established and recognized by an industry authority, such as LEED (Leadership in Energy and Environmental Design), the certification program of the U.S. Green Building Council (USGBC).Fobert tells MHN that AIG Real Estate Solutions periodically conducts a client advisory board that includes multi-housing members. To date, AIG offers nine green product lines and has more in the works. “Green is a huge initiative for us. The growth in green in tremendous and we likewise see the need for products and services that support it. We recognized this as a client need early on,” he recalls, “and did some thinking out of the box to develop these products.”Earlier this year, Lexington Insurance Company, an American International Group company, announced Upgrade to Green Commercial, which is insurance that allows commercial property policyholders to rebuild the insured building and replace personal property with products that embrace the principles of sustainability and reduce the overall impact of the building on the environment.   Upgrade to Green Commercial, available as an endorsement to Lexington Insurance Company’s commercial property insurance policies, is the latest addition to Lexington’s suite of EcoSurance products developed to promote environmentally friendly practices and to respond to changing market needs.”Commercial property owners and developers are looking to improve the environmental performance of their properties,” says George Stratts, division executive and executive vice president, Lexington Insurance Company. “Lexington is committed to supporting the real estate industry’s drive to environmental sustainability, and Upgrade to Green Commercial is designed to help commercial property developers and owners meet burgeoning environmental regulations.”Upgrade to Green Commercial coverage responds to covered partial and total losses for both LEED certified and non-LEED certified buildings. In the event of a total loss, LEED-certified insureds will be allowed to upgrade their building to the next level of LEED certification upon reconstruction. Non-LEED certified insureds can use the coverage to rebuild to a LEED Silver standard.In the event of a partial loss, the coverage focuses on four areas of interest to commercial property owners: energy efficiency, water efficiency, indoor air quality, and sustainability. Upgrade to Green Commercial coverage encourages the use of Energy Star-qualified equipment and lighting systems to reduce energy costs; interior building components such as paints, primers, adhesives, architectural coatings and composite wood partitions, counters, cabinets, systems furniture and seating with lower volatile organic compound emissions to improve indoor air quality; and cabinets, molding, and flooring materials made of bamboo, eucalyptus or other materials that are rapidly renewable or sustainably produced.In addition to covering rebuilding costs, Upgrade to Green Commercial covers expenses for recycling during reconstruction and at the time of loss. To further enhance indoor air quality after reconstruction has been completed, the coverage allows insureds to conduct a period of indoor air testing and increased outdoor air ventilation of the reconstructed space using new filtration media to remove construction contaminants in accordance with LEED protocols. Upgrade to Green Commercial also allows customers to retain a LEED-accredited architect or engineer to participate in the design or construction of a damaged facility. And for insureds with LEED certified buildings, the coverage will also pay registration and certification fees imposed by USGBC if the building needs to be recertified.