Lexington Product to Cover Carbon Credit Assets

Lexington Insurance Co. says its CarbonCover ODS product meets the emerging needs of the climate change and greenhouse gas emissions sector.

CarbonCover ODS responds to direct physical loss or damage of a physical asset that is being collected to create carbon offset credits. These assets can include ozone depleting substances (ODS) removed from refrigeration systems, or methane gas that is extracted from landfills or underground mines.

“The unique loss valuation structure of CarbonCover ODS allows project developers to protect against lost income they could suffer when they are using property with relatively low replacement cost value to create a higher-value carbon offset credit–and that property is lost or damaged during the process,” says a statement form Erik Nikodem, executive vice president at Lexington Insurance Co., a unit of Chartis.

Direct physical loss or damage to the asset is measured as the value of the carbon offset credits that would have been issued for the destroyed asset absent the loss, in accordance with a carbon registry's project protocol.

“Traditional property policies don't respond to the true value of the insured's loss,” Nikodem adds.

CarbonCover ODS is the third product in Lexington's CarbonCover suite of insurance solutions. The suite also includes CarbonCover Registry, which provides professional liability insurance for registries that track, confirm, and verify carbon offset credits; and CarbonCover Design & Confirm, which extends Lexington's architects and engineers professional liability coverage to expressly cover claims arising from greenhouse gas consulting services or emission reduction verification services.

More information can be found in the EcoSurance episode of LexTV.