Insurance for Bale-Wall Structures

By Jeff Ruppert

IMG_7208-1It would be difficult to claim that the straw bale construction industry is apathetic.  We typically address our issues head-on, with surprisingly little financial backing, and a lot of determination.  We have developed building codes in various forms over the past 25 years to address an obvious hurdle to our work.  We have tested and improved systems to address all sorts of concerns from moisture to fire.  It is safe to say we are a community of passionate people when it comes to the issues that affect how we execute our work.

There is one place that still needs some attention, and that is how bale-wall structures are insured.  At this point in time there are many approaches to this hurdle and none of them seem to bear fruit on a widespread basis.  Owners of bale-wall structures are still being denied insurance as if it were 1995.  From the way insurance companies view straw bale structures, you would have a hard time believing that there are thousands of bale structures in the U.S. alone.  We have a huge set of data to draw from in terms of building safety and durability, but the insurance industry seems to be a little wary of believing it.  This article is intended to open up the topic of insurance by looking at the issues and barriers, and to present an effort that intends to address the insurance issue once and for all.

Bale-Building Insurance History
It only seems logical to begin by summarizing where we have been.  From day one of the straw bale construction revival insurance companies have looked at the random homeowner who asks, “Will you insure my straw bale home?” as if they are from Mars.  The insurance industry has been left behind when it comes to understanding the progress made over the past 25 years in our little part of the world.  They know about as much as they want to because our movement is still relatively small.

Various creative strategies have been employed throughout the years by owners of bale structures to insure their buildings against catastrophic loss.  One of the more notable ones is to describe the building as wood or timber framed with cellulose insulation.  Technically this is correct, but when an insurance company representative finds out that the cellulose is in fact bales of straw all sorts of undesirable things can happen.  The most shocking thing that happens, from a technical standpoint, is that the finishes and structural systems are completely ignored as emotion seems to take over.  No longer are the most important systems, which effect fire and smoke spread or the durability of the structure, questioned.  The focus remains solely on the fact that bales are in the walls.

One of the more often-told stories regarding insurance and bale buildings involved one company and dozens of homeowners and it wasn’t pleasant for anyone.  If you are not already aware of it, the International Straw Bale Building Registry (ISBBR), hosted by Sustainable Sources, has posted a listing of insured bale homes for many, many years.  Individuals are encouraged to enter their projects (TLS fully endorses this) so the scope of insured straw bale construction can be visible to everyone.  The insurance listing on the ISBBR’s website lists insurance companies by country that have insured buildings.  This list is meant to assist new straw bale homeowners in their search for insurance.

In the not-too-distant past State Farm Insurance actually used the ISBBR to hunt down and drop policy holders who listed their bale buildings in the Registry.  While State Farm is still one of the biggest holders of bale building insurance policies (according to the limited statistics of the ISBBR), people are not encouraged to seek their insurance through State Farm Insurance by some professionals in the industry.  This one action set back many years of progress in the industry, and as a result the format for reporting insurance statistics in the ISBBR’s website has changed to reduce the possibility of this happening again.  It was very frustrating, because we, as a responsible industry, thought we were doing the right thing by helping others and being transparent.

How does insurance work?
We all know what insurance is and why we have it.  It protects our financial and personal assets in the case of loss or damage.  But how does it actually work?

At the lowest level there is the common insurance policy writer, such as your local insurance company.  These companies write as many policies as they can, package them up and sell them to the reinsurance industry for a premium.  The larger companies, such as Lloyd’s and Berkshire Hathaway, collect portfolios of policies and manage them.  While this is a gross simplification of how the industry works, it illustrates that the small insurance companies may not actually be making the most important decisions.  How the policies are written is dictated by the requirements of the reinsurers, otherwise they wouldn’t want the policies.  Insurance is all about risk management and the reinsurers know how to do this best.

How Does the Structure of the Insurance Industry Affect Me?
In many ways our entire lifestyle is affected by the insurance industry.  They are our protection net in case something bad happens.  If we don’t play by their rules we risk losing something, or everything, in the case of a house.  How they perceive the world is important to us if we want to play on their terms.  We rely deeply on their assistance during those times of disaster or emergency.  It is a two-way street, which is why we pay handsomely for their services.

If we are going to make a difference in how the insurance companies perceive bale construction, they need to understand what it is, how it works, and how it is going to affect their bottom line.  We need to instill confidence in them based on cold, hard facts that show the successful history of bale construction.  Most importantly, we need to convince them that our community is worth supporting.

How we successfully go about doing this is a question that is currently being asked by the Colorado Straw Bale Association (COSBA) in an effort to jump-start reform in the insurance industry so they are more open to provide coverage for straw bale buildings.  To any normal person this seems like a very daunting task.  But considering the results of many years of effort by the California Straw Building Association (CASBA), the Ecological Building Network, and in particular Martin Hammer, to finally get straw bale construction into the International Residential Code (IRC), anything is possible.  The code effort lasted many years and there is no illusion by COSBA this effort will be any different.  The results will be reaped by millions of people into the future.  More on that effort further down.

Some Facts and Strategies Moving Forward
Facts:

  • There are tens of thousands of bale buildings around the world,
  • There is no documented widespread failure of bale walls due to climatic conditions, use of the structure, or even how the walls were built (ie, structural or infill),
  • Straw bale construction is now represented in the 2015 IRC as Appendix S,
  • Bale walls sequester carbon straight from the field in a low impact manner by locking it away in walls for decades and even centuries,
  • Most insurance companies believe that climate change is and will continue to have a significant impact on their bottom line,
  • Bale construction sequesters large amounts of carbon, thereby offering mitigation to climate change,
  • Bale structures have been insured for 20+ years by dozens of insurance companies around the world with a documented track record that does not include patterns of failure,
  • Bale construction is not ASTM certified or part of any industry certification process,
  • Bale construction has evolved over the past 25 years using the latest knowledge of building science.  Best practices have been encouraged from the beginning, which is in stark contrast to many mainstream building systems.

Many of these facts support the case for bale buildings, but some of them identify areas where a little bit of work could have a large impact.  For example, insurance companies should be encouraging the use of natural building materials, including straw bale construction, due to its relatively small carbon footprint.  Climate change is happening and the insurance companies already believe that reducing our carbon footprint will help mitigate their risk.  Part of an effort to educate the insurance industry will include this approach.

Also, due to lack of consistency and certified materials, we need to understand how the insurance company views these types of systems.  It is our responsibility to understand their system of risk assessment and figure out how we will fit into it.  We may feel slighted that we are being punished for using raw materials that lack the level of consistency found in more processed materials, but if we want to be insured, let’s find out how.  We can also couple this line of inquiry with the very enlightening position laid out by David Eisenberg about how wood would fare in today’s regulatory environment if it were introduced today as a new building material.  Wood has many quirks – it has different strengths in different directions, it burns well, it changes dimensions with moisture fluctuations in the atmosphere, it is subject to insect damage, etc.   Once you have this perspective it becomes easier to accept other systems with similar characteristics, or even better, ones with a lot less of the undesirable ones.

Some strategies moving forward include an effort by COSBA to influence decision makers at the top levels of the insurance industry.  Other strategies that can happen individually include introducing the new IRC code to our local insurers.  It is handy to point out that building codes largely exist at the insistence of insurance companies as a way to manage risk.  Most insurance companies have requirements that a completed building permit exist outlining a set of inspections by a building official before issuing insurance.  Building codes and insurance companies are very intertwined, and we now have one side of that equation in our pocket.

Finally, bale buildings have had the benefit of using the failures of other building systems to draw from.  We have had the benefit of building science on our side as best practices have evolved. For example, we know that cement-based plaster and elastomeric stucco do not work well on any type of building because they trap moisture.  Therefore we steer clear of those materials.  We know how moisture moves through the walls of buildings due to the tireless work of folks like John Straube and Joseph Lstiburek who have educated us on how moisture works in walls and how it affects a wall packed full of cellulose material.

Unintended Consequences
Insurance companies have not only dropped policies on bale homes, they have been known to also drop policies that cover those who build them.  One of the COSBA board members, Dusty Szymanski, was dropped by his general liability insurance carrier when they found out he was building bale structures.  This kind of behavior is symptomatic of an industry basing their decisions on fear and mis-information.  This problem is obviously not isolated to the homeowners insurance realm, it is in other parts of the industry as well.  It is time to put forth a concerted effort to re-align the public’s perception, and more specifically, the insurance industries perspective when it comes to bale structures.

One part of the insurance industry that is not unique to itself is that insurance agents who seem progressive and want to do the right thing eventually move on in life from their position of influence and we, as a group, lose that advocate for our cause.  There have been countless examples of local insurance companies insuring both homes and contractors only to have the main agent change careers or move out of the area.  This leaves a void that is difficult to replace.  By addressing this issue at the industry level we can hopefully avoid these kinds of cases in the future.  But one thing is for sure, we’ll need the support of those very agents who are currently in a position of influence as we move forward.  As a reader, and maybe a bale building owner, please consider responding to future requests asking for the contact information of your local insurance agent who has an open mind.  We’ll need their support at some point.

How Can I Get Insurance Now?
While there is no magic solution at this point, we can make some recommendations for those of you who need help now.  It’s nice to talk about this stuff, but results speak volumes.

First, visit the International Straw Bale Building Registry hosted by Sustainable Sources. You will find a long list of insurance companies listed by country.  Use it to your advantage as you begin the search for insurance or a mortgage.  And by all means, list your own projects.

Second, one of the most successful ways to find an insurance agent who is open to bale structures is to open the phone book, or go online, and start calling each insurance company.  While this may seem like a difficult task, it will probably yield the fastest and best results.

Third, call other nearby homeowners or bale contractors.  While that may not net current information, it may provide some narrowing of the field of possibilities.

Fourth, your insurance premium may be higher on bale homes.  This is the reality right now.  But if we avoid building bale structures because the insurance premium is a little higher, the larger industry will be affected and we will have a more difficult time reaching a tipping point, whereby premiums come down as the insurance industry becomes more educated.  If you feel like you are paying too much for your insurance, help us solve this problem.

Fifth, consider making a donation to COSBA for their upcoming effort to address this issue.

COSBA’s Initiative
COSBA is in a unique situation right now, having hosted the last International Straw Building Conference back in 2012.  The effort of hosting the conference burned the board of directors out.  They have been laying low and recovering from what amounted to, by some accounts, as the best conference on bale construction to date.  While that may be up for debate, the board has reconvened and decided to take on the next major hurdle, which is insurance in a similar fashion to what the folks in California have done for codes.  What CASBA did was different, but we can draw from their experience and work together in tackling this sticky issue once and for all.

To support this effort COSBA is actively seeking donations and support in any form as we begin a discussion with the various stakeholders. We don’t yet have a clear list of tasks, but we have pretty clear idea on how to formulate an effective plan of attack.  We will be reaching out to regional organizations and individuals who have something to gain from such an effort.  Stay tuned for updates and announcements as we take the first steps in what will hopefully be a successful process with a partner that hardly knows we exist.

Jeff Ruppert is the editor of The Last Straw, a civil/structural engineer, a former bale-building contractor, a founding board member of the Colorado Straw Bale Association, and he is tired of revisiting this issue every few years due to the slow rate of change by the insurance industry.  COSBA is in the process of reinventing itself, which will include playing a larger role in bringing necessary change to the construction industry.  This article has been approved by the COSBA Board of Directors.  Look for more on insurance in upcoming issues as we tackle this sticky issue.

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