Living Green: How It Affects Your Home Insurance
Choosing to “live green” is a lifestyle choice that is becoming more widespread than ever. Many are concerned about our human impact on the environment, what happens to our refuse, and in general, living with energy and water conservation in mind. Since houses encompass all of these concerns, it’s no surprise that the benefits of green living are most apparent when it comes to our homes.
In today’s world, green changes in the home can mean a lot of different things to different people. For some, it means installing solar panels on an existing home; for others it means starting green with special building materials or living smaller or closer to the land. All of these are things to take into consideration; all of these choices will also impact your home insurance. Here we’ll discuss the three different approaches:
Adding Green to Your Home
If you want your existing home to be more green, the easiest way to begin is by retrofitting green building enhancements. For instance, you might add a skylight for natural light in the bathroom, thus reducing the energy use of your home, or you might add a greenhouse as one of the structures on your property so that you can grow plants throughout the year. Finally, you might also decide to add solar panels to your roof or property so that you can reap further benefits of reduced energy costs.
All these enhancements are expenses, but insurance companies don’t look at it this way. They look at the replacement value. You will need to consult with your agent to see if the replacement value of your home has changed, and here are some of the ways it could:
- Skylight. The skylight itself isn’t all that expensive to install, but it could add additional risk to your home if not installed properly. We’ve all seen skylights that leak, so the insurance company might take that risk into account as well as the higher replacement value.
- Greenhouse. Most homeowner’s policies take into account a certain percentage of coverage for any additional structures on the property. Therefore, if you have multiple structures, it’s a good idea to make sure you don’t need additional coverage.
- Solar panels. Solar panels are expensive, but it’s the replacement value your insurance company is interested in. There’s a standard line item in insurance algorithm calculations for this, so it’s imperative to let them know that you have added this green feature so you’re covered if something happens.
Living Smaller or Closer to the Land
A lot of people are choosing to go green by downsizing. This can mean anything from living with less clutter to living with less square footage. In fact, the “tiny house movement” is a growing trend in the U.S. According to The Tiny Life, over 4,000 houses were completed in 2014, and there has been even more growth in that sector in the last couple of years. Even if you do not decide to “live tiny,” reducing your square footage reduces your insurance policy. It’s simple: less property to insure means less cost to you.
On the other hand, if you choose to reduce your footprint by growing your own food and are going beyond your own subsistence, you might have other insurance considerations to keep in mind. Selling any excess food (even perhaps eggs or goat’s milk) consistently at a market would bleed into a gray area of running a product-based business and might need to be covered differently than your standard homeowner’s insurance.
Either way, your agent can help advise you. Agents are trained to work on your side, so they want to give you the best coverage for what you are doing and the lifestyle you live, whether you want a watermelon patch in your backyard or a tiny house.
Choosing Eco-Friendly Building Materials
When it comes to insurance, the type of building materials you choose can really affect the amount of insurance you need. Eco-friendly building materials are traditionally more expensive than conventional materials, and thus, the replacement value of them would be more expensive as well. That replacement value is really what the insurance companies focus on, so you might need more coverage.
However, the material used can really make a difference. Take, for instance, the trend of straw bale construction, the process of using bales of straw as structural elements. Although that might sound quite unconventional, the method of construction as well as the flame-retardant material sprayed on it is very attractive to insurance companies since it yields very low risk. In fact, it is extremely durable in storms as well, which is another important consideration.
Green living is a lifestyle and insurance companies are built to respond to the lifestyles of their clients. From a tiny house to solar panels (or both!), your insurance policy can be tailored to fit your needs. Insurance is designed to protect you in the best way possible, and that works best when you consult with your agent about changes to your home.
Ryan Hanley is the Vice President of Marketing at TrustedChoice.com and the Managing Editor of Agency Nation. He is also a speaker, podcaster and author of the Amazon best-seller, Content Warfare. Ryan has over 10 years of insurance expertise and blogs frequently to help consumers understand complicated insurance topics.