Home Insurance Policies That Offer Green Home Discounts

Insurance companies frequently offer discounts and incentives to save you money, though the offers vary depending on your location and other factors. You may be familiar with home insurance discounts for having multiple policies and installing home security systems, but you may also be able to save with green home discounts that reward eco-friendly home features.

Let's look at how green home discounts work, which companies offer the best green discounts, and more.

How Do Green Home Discounts Work?

Some insurance companies encourage sustainable building practices by providing discounts to homeowners who make certain improvements. While eco-friendly home insurance discounts aren't exactly common, it's worth asking your insurer if you qualify for one if your home has environmentally friendly features or green home upgrades.

Smaller upgrades, such as switching to smart home devices, such as a smart home water sensor, to larger ones, such as installing Energy Star-rated appliances, may qualify for a discount. Homeowners considering a total home remodel may choose to go green by adhering to reputable green home standards such as LEED, which we will discuss further below. You may be required to submit proof, such as receipts or certifications, depending on your insurer's policies.

  • Green home upgrades may not be covered by a standard home insurance policy. Furthermore, solar panels and wind turbines may be excluded from coverage or significantly raise your premiums. Before investing in costly upgrades or beginning a renovation, read your policy's terms and speak with an agent to confirm your coverage.

The Most Common Green Insurance Incentives

The two most common types of green discounts you'll come across are:

  • Homes that have received LEED certification: LEED stands for Leadership in Energy and Environmental Design Green Building Rating System. It is a recognized environmental standard developed by the United States Green Building Council that encourages the design of energy-efficient and sustainable homes. LEED-certified homes are awarded a certification, which you can then present to insurers as proof of compliance to receive your green discount.
  • Eco-friendly products: Making the switch to Energy Star-rated appliances or smart home products that make your home more efficient may result in a home insurance discount. Other smart home products that act when one of your home's systems fails, such as intelligent water sensors that shut off water sources when leaks are detected, may also qualify you for a home insurance discount.

Green Home Discount Insurance Costs and Savings

If you have a LEED-certified home, you may be eligible for a 5% discount on your home insurance premium. With the national average homeowners insurance cost reported to be $1,211 per year in 2017, the most recent year for which data is available, a 5% discount equates to a $60.55 annual savings. That may not be enough to persuade you to completely remodel your home in order to obtain LEED certification, but consider how you'd save money and resources in other ways, such as lower energy costs.

Some insurance companies provide green home endorsements that do not require LEED certification. Following a covered loss, the insurance company may reimburse you for the additional cost of rebuilding your home with green materials or products. If you're interested in this type of endorsement, it's best to check your policy terms and speak with an agent about your coverage needs.

  • The most common and easiest to obtain green home insurance discount is to have a paperless policy. You won't save much money with this strategy, but every little bit helps, and it's a lot easier than renovating your home or replacing all of your appliances.

Insurance Companies With the Best Green Discounts

Our top three picks for home insurance companies with the best green discounts are listed below. To make this guide more useful, we narrowed our search to established national insurers and compared green home discount offerings to select our top choices.

Travelers

Homeowners who already have a LEED-certified home or condo can save 5% on their home or condo insurance. Travelers also provides an optional green home coverage that assists in covering the additional cost of replacing, repairing, or rebuilding with green materials following a covered claim. 

Farmers

Farmers provide discounts for green certifications such as Energy Star and LEED. However, because Farmers only allows you to have one of these four discounts, you must choose between a discount for having a green certification, protective devices, home safety features, or a smart home system.  It may be worthwhile to compare quotes with each discount to see which one provides the greatest savings. Farmers also provides an optional Eco-Rebuild coverage for up to $25,000 toward the cost of constructing green replacements following a covered loss.

American Family Insurance

Small eco-friendly changes can also help you save money on your homeowners insurance. If you have a smart thermostat or a smart water sensor that detects a leak or unusual water flow, American Family Insurance will give you a discount.

The Bottom Line

Greener homes are becoming more popular as a result of higher energy savings and a lower environmental impact. Green home discounts, on the other hand, may allow you to reap the benefits of lower home insurance premiums.

To get the best overall value on your policy, check with your current insurer to see if it offers any green home savings, as well as shop around and compare quotes. When weighing the potential return on your investment, consider the cost of green home improvements in relation to the savings you'll receive on your home insurance and energy bills.