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How To Save On Insurance With Eco-Friendly Homes

author-photoWritten by Dylan Tate
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Dylan Tate

Dylan Tate is an insurance content expert for SmartFinancial with 70+ articles about home, auto and life insurance under...

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editor-photoEdited by Dan Marticio
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Dan Marticio

Dan Marticio is the content manager at SmartFinancial and has written 150+ articles across multiple insurance verticals....

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Updated June 29, 2023

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You may receive discounted homeowners insurance rates if you make use of energy-efficient features and sustainable materials to secure a Leadership in Energy and Environmental Design (LEED) certification for your home. In addition, smart home appliances can decrease the chances that you will need to file a claim and earn you further insurance discounts.

Read below to learn about the characteristics of eco-friendly homes and how they could help you save money on home insurance and other expenses.

Key Takeaways

  • Insurance companies may offer you discounted homeowners rates if your house is LEED certified or includes a smart home system.
  • Eco-friendly homes are designed to lower your carbon footprint by using locally-sourced materials, ENERGY STAR appliances, passive home design principles and other resource-conserving features.
  • Sustainable houses can offer health benefits by improving the air quality in your home and often come with lower power bills and maintenance costs.
  • American Family, Farmers, Nationwide and Travelers offer some kind of green discount while Allstate, The Hartford and Travelers offer green endorsements to help you upgrade your home after a covered loss.
  • The federal government and state governments provide grants and tax credits that you can use to help make your home more energy efficient.

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Expand Table of Contents

What Does It Mean To Have an Eco-Friendly Home?

An eco-friendly home incorporates materials and features that can help lower your family’s carbon footprint and limit the home’s impact on the environment, usually by lowering the amount of electricity you use. Some of the factors that can make a home more environmentally friendly include the following:

  • Locally-sourced materials: The closer your home is to the materials used to build it, the less carbon dioxide vehicles will burn in the process of transporting those materials.
  • Green windows: Certain aspects of the design of your windows can contribute to their environmental impact. For example, double-pane windows are adept at insulating your house, allowing you to limit how much you use your heating and cooling systems.
  • Green roofs: If your roof is flat or has a minimal slope, you could install a rooftop garden, also known as a green roof, which insulates your house, stores rainwater and improves the air quality in your neighborhood.
  • ENERGY STAR appliances: You can purchase a wide range of appliances like washing machines, refrigerators, freezers, air purifiers and dehumidifiers with an ENERGY STAR label that indicates they meet energy efficiency standards set by the Environmental Protection Agency (EPA), meaning they require less electricity than traditional appliances.[1]
  • Smart home devices: Many smart home devices and systems can also help you save electricity. For example, smart home thermostats can often automatically adjust to regulate the temperature in your home and prevent you from wasting power.
  • Solar panels: Even if you cannot collect enough energy to completely power your house, renewable energy sources like solar power can supplement your electricity usage and make your home more sustainable overall.
  • Water conservation: Low-flow toilets, faucets and showerheads can help you regulate your water consumption. In addition, you could collect rainwater for purposes like watering your plants.
  • Passive home design: You can limit your energy usage by employing passive design elements. For example, you could strategically install windows so you can rely on natural light more than electric-powered light bulbs. Well-placed windows also allow for natural ventilation that limits how much you need to use your air conditioning system and improves the air quality inside your home.
  • Waste management: Recycling materials like paper, cardboard, glass, plastic and metal can keep you from wasting resources. It’s also important to properly dispose of electronic waste and other types of trash that could pose an environmental hazard.

The premier marker of an eco-friendly house is a LEED certification from Green Business Certification Inc. (GBCI). GBCI issues points based on how a building deals with carbon, energy, waste, water, transportation, materials, health and indoor environmental quality. To be LEED certified, a building must score at least 40 points.[2]

How To Save On Insurance With Eco-Friendly Homes

The easiest way to qualify for eco-friendly home insurance benefits is to purchase a home that was constructed with LEED certification in mind. While it is possible to upgrade an existing building to make it more eco-friendly, you will likely have to completely rebuild your home to meet GBCI’s standards.[3]

What Are the Benefits of Living in Eco-Friendly Homes?

The most obvious benefit of environmentally-friendly homes is that they can reduce your energy consumption, thereby lowering the amount of fossil fuels you are responsible for burning and minimizing your impact on the environment. However, there are also several other practical benefits to purchasing eco-friendly houses.

For example, you will most likely pay lower energy bills when you use appliances designed to be energy efficient.

Other eco-friendly house features can lead to lower maintenance requirements and could even improve the health of you and your family members by improving the air quality in your home.

Can an Eco-Friendly Home Help Me Save On My Homeowners Policy?

You could save on homeowners insurance if you have an eco-friendly home because many insurance companies offer green discounts. For example, Kin Insurance offers a 5% home insurance discount to California residents whose homes are LEED certified.[4]

In addition, some eco-friendly products could lower the odds that you will need to file a homeowners insurance claim that would cause your rates to increase. For example, many smart home systems can detect a leak and either alert you or automatically shut off your water supply, saving you the trouble of dealing with a sudden water discharge and subsequent homeowners claim.

Which Companies Offer Discounts or Rebates for Eco-Friendly Products?

Several national insurance providers offer lower rates if you have an eco-friendly house. Some companies also offer extra home insurance coverage to help pay for environmentally-conscious upgrades. See below for an overview of green discounts and endorsements from major insurance carriers.

Company

Green Discounts

Green Endorsements

Nationwide

Up to 10% off home insurance coverages related to fire, water and theft if you install a smart home system[5]

N/A

Travelers

Up to 5% off home insurance for LEED-certified houses plus discounts for installing smart home technology[6]

Green home coverage provides extra money for eco-friendly materials if you need to repair, replace or rebuild part of your home after a covered loss[7]

The Hartford

N/A

Green rebuilding coverage provides up to 10% of your dwelling coverage limit for eco-friendly repairs while equipment breakdown coverage pays up to 125% of the value of lost equipment if you buy eco-friendly replacements[8]

Allstate

N/A

Green improvement reimbursement covers extra costs that arise when buying energy-efficient replacements for lost or damaged items[9]

American Family

Offers discounts for the use of smart home devices[10]

N/A

Farmers

Offers discounts for ENERGY STAR appliances, LEED certification, EPA certification and smart home systems[11]

N/A

How To Make Your Home Eco-Friendly

You may be able to receive support from the government in the form of a tax credit or grant in order to make your home more environmentally friendly. For example, the federal government offers tax credits that can cover between 30% and 100% of the costs of installing certain energy-efficient appliances like solar panels, dryers, ovens and water heaters.[12]

In addition, your insurance company can help you upgrade your home to add eco-friendly features if your policy includes a green endorsement such as those offered by Allstate, The Hartford and Travelers.

Keep in mind that, even if you have a green endorsement, your insurance provider will likely only pay for eco-friendly upgrades after a covered loss, meaning you won’t have much control over when you can update your home’s features. You should also remember that, if you don’t have an appropriate endorsement, your insurance company won’t pay for any replacements that exceed your policy limits.

Talk to an Agent About Saving on Home Insurance

FAQs

Are there grants for building eco-friendly homes?

The federal government and state governments offer grants and tax incentives to make it easier to build eco-friendly homes. For example, North Carolina residents can receive grants from the Office of State Budget and Management in order to improve the sustainability of their homes.[13]

Are eco-friendly homes more expensive?

Highly energy-efficient houses are generally about 1% to 8% more expensive to build than standard homes.[14] However, energy-efficient homes may make up for higher building costs in the form of lower (or sometimes nonexistent) energy bills.

Are smaller houses more eco-friendly?

Smaller houses tend to be more eco-friendly since they require fewer materials and less energy.

What is considered a green home?

A green home is generally one that minimizes your impact on the environment by conserving electricity, water and other resources while limiting waste.

What are the benefits of a green home?

Green homes can lower your energy bills and homeowners insurance costs, improve the air quality in your home and simplify your home’s maintenance requirements. 

Sources

  1. U.S. Environmental Protection Agency. “ENERGY STAR Appliances Brochure,” Page 2. Accessed May 15, 2023.
  2. U.S. Green Building Council. “LEED Rating System.” Accessed May 15, 2023.
  3. Center for EchoTechnology. “LEED Certification for Homes.” Accessed May 15, 2023.
  4. Kin Insurance. “What Is a LEED-Certified Home Discount?” Accessed May 15, 2023.
  5. Nationwide. “Smart Home Program.” Accessed May 15, 2023.
  6. Travelers Insurance. “Home Insurance Discounts & Savings.” Accessed May 15, 2023.
  7. Travelers Insurance. “What Does Homeowners Insurance Cover?” Accessed May 15, 2023.
  8. The Hartford. “What Does Homeowners Insurance Cover?” Accessed May 15, 2023.
  9. Allstate. “Optional Coverage.” Accessed May 15, 2023.
  10. American Family Insurance. “Smart Home and Home Security Discounts.” Accessed May 15, 2023.
  11. Farmers Insurance. “Home & Auto Insurance Discounts and Savings.” Accessed May 15, 2023.
  12. The White House. “Clean Energy for All.” Accessed May 15, 2023.
  13. USGrants.org. “North Carolina Housing Grants 2023/2024.” Accessed May 15, 2023.
  14. Rocky Mountain Institute. “The Economics of Zero-Energy Homes,” Page 7. Accessed May 15, 2023.
About the Author
Dylan Tate
Dylan Tate
Home Insurance Expert

Dylan Tate is an insurance content expert for SmartFinancial with 70+ articles about home, auto and life insurance under his belt. He has over seven years of experience writing for online publications, primarily about gaming and esports. In the process, he has become an expert in search engine optimization, news reporting, feature writing and copy editing.

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