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Earth Day and Insurance

Friday, April 22, 2011

Earth Day and Insurance

Going green may help you save premium green.

Green energy, sustainable food, recycling, hybrid vehicles—environmental awareness is making an impact on the lives of Americans everyday. Many consumers are choosing to make both small and large changes to reduce their carbon footprint. In recognition of Earth Day, if you are contemplating going green during Financial Literacy Month, the DC Department of Insurance, Securities and Banking (DISB) suggests you consider how those changes could affect your insurance needs—especially your auto and homeowner’s policies.

“The fact that we can take a moment out of our fast-paced lives to reflect on our planet, to ensure we leave it in a better condition for our future generations, is very encouraging,” said DISB Acting Commissioner William P. White, adding that today is the 41st anniversary of Earth Day. “It is fitting that during Financial Literacy Month, we continue our pledge to educate our residents to become more financially aware, even within the green agenda.”

AUTO INSURANCE

Driving Less, Saving More

Many insurance companies use the number of miles you drive as a factor when figuring your auto insurance premium. So, if you’re considering ways to shrink your carbon footprint by driving less, you might also be considering options that could lower your auto insurance premium. Here are a few insurance implications to some of the more often used means to “green” your ride.

Buying a Hybrid Vehicle

If you’re out to burn less fuel and take advantage of the federal tax incentive to buy a hybrid, before you drive off the lot, it’s always a good plan to check with your insurance agent to see how the change is going to affect your policy.

The standard auto insurance policy is the same for a hybrid as it is for a standard vehicle. To find out more about the coverage in a basic auto insurance policy, go to the National Association of Insurance Commissioner (NAIC)’s consumer-education website, Insure U, at www.insureuonline.org/ and review the auto insurance tips and considerations in your life stage.

Trading up a used car for a new car is generally going to increase your premium; however, part of that increase might be offset by a discount many insurance companies now offer for hybrid car ownership. Check with your insurance agent or company to see if you qualify for an additional discount.

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 check your policy before you’re offered more coverage at the rental counter. You’ll find more information about whether you need additional insurance when renting a car here.

Coverage for a hybrid should be the same as for a standard vehicle, but it never hurts to check. Ask the car rental agent if the accident coverage they offer is specifically for the hybrid, and then call your auto insurance agent or company and make sure your policy doesn’t have limitations for hybrids.

Pay-As-You-Drive or Pay-As-You-Go Auto Insurance

A newer option for car owners in select states is pay-as-you-drive auto insurance. These polices provide discounts based on mileage. These types of programs are not available from all companies, or in all states, so if you’re interested, call your agent and ask if it’s an option. These programs are not limited to hybrid car owners.

To figure out how much you’re driving, the insurance company uses a data logging device (DLD), which is plugged into an onboard diagnostic port in your car called an OBDII. This captures the number of miles you drive, the time of day you drive, or some combination of those factors and then uses these to calculate your premium.

Park and Ride

If you live in a large urban area or travel great distances from home to work, you may be considering “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 have a positive effect on your premium.

Your auto insurance premium is based partially on the number of miles you drive. If you are dramatically cutting 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 company and talk with them about the change to see if it would affect your premium.

And a couple other things to check on while you’re on the phone: make sure your auto policy is going to cover the car for any damage that happen while it’s parked in the lot and make sure your homeowners or renter’s policy would cover your belongings left in the car if it was broken into while you’re at work.

Car Shares

If you’re a city dweller who has given up a car all together, you may be considering a car share plan for those times when you really need your own wheels to get around. Car shares like ZipCar in the District offer members the flexibility of picking up a car for a couple hours or a full day. Generally, you have to become a member to use these fleets.

Insurance coverage is generally included in the cost of using one of these 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 change from state to state, so make sure to talk with the car share company before you take the car.

Drivers who don’t own a car, but drive occasionally may be considering 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 damage to the car you’re driving. Also, the Capital BikeShare program allows District residents to share the use of bicycles to get around the city.

HOMEOWNERS INSURANCE

For homeowners that are striving to make their homes meet the US Green Building Council (USGBC) or LEED® certification, checking your insurance policy to make sure you’re covered should be an important step in the planning process. A standard homeowner’s policy might not cover the costs of replacing your upgrades. Confirm that your homeowner’s policy specifically provides replacement to that same environmental level so that you won’t have to pay out-of-pocket costs to reach those same standards.

Green Homeowners Insurance

A green homeowner’s 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 the 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 discounts offered on green policies will differ from company to company. 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.

Green policies are not available in all states, so check DISB, the District of Columbia’s insurance department to find a company licensed to write green homeowners insurance in the city. Visit DISB at www.disb.dc.gov or call (202) 727-8000. You may find a link to the Insure U website in Spanish there as well.

To find out more about homeowners insurance, including the difference between actual cash value and replacement cost, go to www.InsureUonline.org, choose the life stage that best fits your needs and review the tips and considerations for homeowners.

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 insurance company before making the modifications. Some insurance companies are now extending homeowners coverage to these green renovations, but not all companies offer the coverage. In some cases, the addition of solar panels or a wind turbine can significantly affect the cost of your insurance policy. So, before you install either on your property, call your state insurance department to see what your legal obligations are for insuring them. Then call your insurance agent or company to see if they will extend coverage to the additions. If they don’t, your state insurance department can tell you if there’s a company licensed in your state which offers the coverage.

If you have solar panels or a wind turbine and are considering selling your excess energy, you may have specific insurance obligations before setting up the transfer. Find out more about green energy insurance here.

More Information

Your insurance needs change throughout your lifetime, and so do your insurance options. If you have questions about a particular type of coverage or to find our more about your needs at your life stage, go to www.disb.dc.gov and visit the Insure U education module.

And to protect your insurance investment, always STOP before writing a check or signing a contract for coverage; CALL DISB, the city’s financial-services regulator and CONFIRM that the insurance agent or company you’re considering is licensed in the District. Visit DISB at www.disb.dc.gov or call (202) 727-8000.