As the world continues to grapple with the challenges of climate change, energy efficiency has become a pressing concern for businesses across the United Kingdom. In this context, Energy Efficiency Upgrade insurance emerges as a valuable tool to incentivise and protect commercial property owners, tenants, funders, but also advisors. Here are some of the benefits of Energy Efficiency Upgrade insurance and its role in driving sustainable practices within the commercial property sector:
- Empowering Tenants
Energy efficiency upgrades not only enhance the sustainability of commercial properties but also provide significant cost savings for tenants. By offering Energy Efficiency Upgrade insurance, property owners can encourage tenants to adopt energy-saving practices and technologies without the worry of upfront costs. With the assurance of insurance coverage, owners can spend the required capital which will reposition their property assets for improve rental yields and strong tenant interest. Business premises are a key metric that will be assessed when reviewing ESG credentials.
- Protecting Owners
For commercial property owners, energy efficiency upgrade insurance provides protection against potential risks and uncertainties associated with retrofit projects. This insurance coverage can safeguard owners against unforeseen costs, project delays, or performance shortfalls. By mitigating financial risks, owners can confidently invest in energy efficiency upgrades, knowing that their investments are protected and have the tools to attract third party investment and/appease a board of directors to sign off expenditure.
- Attracting Funders
Funders, such as banks and financial institutions, play a crucial role in supporting energy efficiency initiatives. Energy Efficiency Upgrade insurance acts as a catalyst for funders to provide financial assistance to commercial property owners. By offering insurance coverage for energy retrofit projects, funders can mitigate their own risks and instil confidence in their investments. This, in turn, makes it more attractive for funders to support energy efficiency upgrades, leading to increased access to capital for property owners as credit risks are improved.
We are working with Munich RE, one of the largest insurers globally to bring this proposition to market. Which covers:
- Material Damage – Physical damage, including breakdown to equipment and materials installed as port of an energy-saving project.
- Business Interruption – Loss of gross revenue (generated under an energy service contract) and increased cost of working following damage to insured equipment.
- Asset Performance – Covers the annual shortfall in energy savings (caused by deficiencies in the design or implementation of energy-saving measures) compared to the amount of savings insured by the policy.
To hear more opinions from Michael Grimwood, click below to read about his thoughts on harnessing Energy Efficiency insurance in order to boost surveyor’s service sales.