Insuring Green Buildings - Research Paper Example

In most occasions, it is easy for the insurance companies to accept, underwrite and process the loss handling for the homeowner by automating or simplifying the damage. The focus here is usually to get the sum insured and process the policies effectively (Yudelson, 2006). Most the time those selling the homeowner policies, they insurer do not necessarily look at the different building material for construction in the building, the construction classes or the ecological standard of the building.

This is because, in case of a loss or damage, there may occur a dispute between the insured and the insurer regarding the extent in which the damage must be indemnified (Glavinich, 2008). If there is a need for more specification concerning the building construction, the insurance company sends their agents to ask more specifications of the construction process. Although the insurance companies have their agents who researches on the construction process, the agents are advised not verify certain details which may lead the insured to decline the policy and sign the policy with other competitors that ask few questions.

Up to now, no study has provided statistical evidence supporting the stance that “green buildings” have a higher probability and severity of losses. Perhaps the effort to analyze green buildings in detail is not yet justified, given the actual number of owners of green buildings; however, the green buildings are more risky and carry higher claim expectancy (Glavinich, 2008). Residential building insurance mainly provides insurance cover for losses arising from fire, supply water and storm/hail events.

Loss experiences, and consequently exposure evaluation and rating of homeowner risks are based on conventionally built houses, concrete, brick, steel and wood (Spiegel & Meadows, 2012). For example, in houses with thatched reed roofs, the probability of a