Brokers say that while liability coverages addressing green-building risks have been slow to emerge, property insurers have responded much more readily to calls for new coverage solutions.

Marsh, in its most recent report on the “Green Built Environment in the United States,” updated through December 2008, listed Fireman's Fund, Lexington, ACE, Travelers, Liberty Mutual and FM Global as carriers offering special property coverage for green buildings.

At ACE, Kurt Husar, senior vice president of ACE USA Global Property, described his company's property coverage offerings as “standard,” giving some insight into how green property insurance generally works.

ACE has offered a Green Building Restoration endorsement since March 2008, according to Mr. Husar, who said the endorsement allows damaged portions of buildings to be rebuilt to greener standards after a loss.

The coverage for buildings that aren't already green entitles the insured to “a certain bank of money” (defined as a percentage of the underlying net loss) to use to make the building green “in any way they see fit–whether it be carpeting, lighting or something else.”

“We would not dictate what they have to do,” he said–confirming, however, that if a fire burned only one floor of a building, the insured could not upgrade areas not damaged by fire, smoke or water as a result of the event triggering a claim.

ACE also offers property coverage for existing LEED-certified buildings, he said.

“As long as we know what has been done to that building [and] replacement values,” ACE provides coverage to “put the materials back as the way they were found. It's exactly what we do in the non-Green world,” where policies provide for replacement with like-kind and quality materials, he said.

Mr. Husar noted that because green-building materials are harder to come by and green-construction processes take longer, policies allowing for green-rebuilds or green-upgrades cost more than comparable policies for non-green buildings.

“You can't always go to your local hardware store and get exactly what you need,” he explained, noting that since property policies cover business interruption income losses in addition to rebuilding costs, the longer time element is a rating consideration.

Mr. Husar said ACE is distinguished from competitors by a better understanding of green construction that comes through environmental risk management and consulting firms–ESIS and Hygienetics–that are operating units of ACE.

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