As more homeowners unplug, they may find
companies hooking them up with specialized coverage.
To save energy and money, many environmentally conscious
homeowners recycle, compost, switch to compact fluorescent bulbs,
take public transportation and use green materials in their
And a growing number of Americans are taking an even bigger step to
reduce their carbon footprint -- they're generating their own
energy. Instead of hooking up to a public electric or gas company,
they're taking their homes "off the grid" by using alternative
Donegal Insurance Group, based in Marietta, Pa., is currently
the only insurer to offer a discount for reducing reliance on
public utilities. It gives homeowners a 5 percent discount on their
premiums if they use solar panels or geothermal pumps to heat their
But living "off the grid" doesn't mean going without power.
"If someone is living in a house with no heat and no water,
that's not somebody we would like to insure," says Cyril Greenya,
Donegal's chief underwriting officer. "If they have wood fireplaces
or coal stoves, that's not something we want to insure. Now you're
talking about a fire hazard. But geothermal and solar are
different. They're safe."
To qualify for Donegal's discount, you must hire a qualified
contractor to install the solar panels or the geothermal pump. In
addition, the geothermal heat pump has to meet the federal
government's Energy Star requirements at the time of its purchase.
So far, Donegal hasn't written any homeowner policies for homes
powered by wind, Greenya adds.
Donegal has been an environmentally conscious company for years.
At the company's headquarters in southeastern Pennsylvania, for
instance, lights automatically turn off when a room is not in use.
"We want to be socially and environmentally responsible," Greenya
says. "It's not in our mission statement, but it is one of the
objectives in our business plan."
Home insurance discounts for going "green"
Over the last several years, many home
have offered their customers discounts for owning environmentally
friendly homes. At the end of 2009, the Insurance Information
Institute (III) reported that 22 companies offered 39 products and
services for new green buildings or older buildings with green
upgrades. Since then, more insurers have begun to offer green
coverage to homeowners, says Michael Barry, an III
Barry says he isn't aware of any insurers besides Donegal to
offer homeowners a discount for being off the grid.
"Alternative energy coverage is a niche business," he says. "But
as more homes are being built that are so-called eco-friendly, and
as more homeowners take an interest in them and as more builders
build them, you will see more insurers cater to this audience."
Roughly 750,000 American households are off the grid, according
to a 2010
Christian Science Monitor
article. Nick Rosen, author of
Off the Grid: Inside the Movement With Space Less,
told the publication he estimates that this population increases 10
percent a year. One of the most well-known persons who lives off
the grid may be Ed Begley, Jr., an actor and environmentalist,
whose quirky life is chronicled in the "Living With Ed" series on
the Planet Green cable channel.
Most insurance quotes ignore alternative energy
While the nation's leading home insurers don't offer lower
for homes that use alternative energy sources, they do sell
insurance for them. For years, State Farm has underwritten policies
for homes that are not hooked up to a power company. Jeff McCollum,
a company spokesperson, says the insurer treats these homes like
any other property: The risk and insurance premium for each is
evaluated on an individual basis.
"We have no problem insuring homes that are off the grid,"
McCollum says. "We've been around more than 80 years, so we were
insuring homes that were off the grid before there was a grid."
No need to buy additional home insurance coverage
You do not have to buy additional riders for policies to cover
either solar panels or geothermal pumps. The equipment value is
included in your home's total replacement cost. But you should make
certain that your policy accurately reflects the current
replacement cost to rebuild or repair your home.
Barry says that as alternative energy becomes more popular, more
insurers might start offering "off the grid" discounts in order to
gain a competitive edge.
"As homeowners migrate toward green buildings, home insurers are
going to go with them," he says.