With the insurance industry increasingly prepared to recognize policy holders who opt for environmentally sound choices, homeowners are now in a position to save money by going green. At this point in the evolution of eco-friendly insurance discounts, there are two types of consumers who can benefit from potential rewards, those who are interested in saving money immediately and those who are planning ahead for better choices in the future.

As risk profiles in the insurance industry are revised to reflect modern trends, consumers who exhibit environmentally conscious behavior are rated as less likely to file claims due to the fact that they live in efficient homes and make cautious choices. Essentially, eco-friendly homes rate high for durability and have fewer system failures. This is not to say, however, that all green choices are equal. Many homeowners who have installed photovoltaic cells to generate solar power, for instance, have actually seen their premiums rise, especially in regions prone to severe weather. Therefore, all “green” modifications must be considered on a case-by-case basis.

Currently, the “sure thing” green discounts are:

• those awarded to homes that qualify to receive Leadership in Energy and Environmental Design certification

• and those awarded for the selection of Energy Star-rated appliances.

Efficient water heaters, air conditioners, and heaters run less of the time and are thus subject to fewer mechanical issues. The industry-wide standard for such discounts has settled at around 10%. Generally the homeowner need no nothing more than tell the insurance company that the unit has been installed. (In cases of remodeling projects, talk to the insurance company before work begins and determine if any price breaks are available for the use of toxin-free materials or for modifications like double-pane windows and extra insulation.)

Additional insurance products that are becoming more common include policies written to cover buildings that meet established standards of efficiency and sustainability and endorsements to existing policies that let homeowners replace damaged appliance and building materials with more environmentally sensitive selections in the wake of a claim. The latter will actually add roughly 2% to the annual premium cost (about $25 a year on a home insured for $350,000), but will greatly reduce the cost of future green home improvements.

As the industry continues to make strides in recognizing the use of energy efficient appliances and building materials, homeowners would do well to review their policies at least once a year and to make the necessary coverage changes to reflect the latest condition of the structure and its contents. An annual insurance review should be considered as an aspect of routine home maintenance. Don’t put yourself in the position of insuring items you no longer own or of missing out on discounts for solid, environmentally-friendly behavior.