Carbon reduction company Climate Care has launched what it claims are the first eco-friendly motor and travel insurance policies.

The policies' green credentials come from the carbon offset that is combined with the insurance policy. This is priced according to policyholders' carbon output as estimated by Climate Care.

Money generated from customers' offsets will go directly towards funding Climate Care's carbon-reducing projects, including providing energy-efficient stoves to communities in Honduras and India, installing energy-efficient lighting in South Africa and Kazakhstan and restoring rainforest habitat in western Uganda.

AXA is underwriting the travel policy and joins Groupama, Norwich Union and a number of other insurers on the panel for the motor policy.

Mark Cliff, distribution director at AXA said: "The insurance industry has really started to see the effects of climate change. The core concept of insurance is protection against risk, so it makes sense that as an industry we should be helping to protect the planet and reduce the risk of climate change. We all have a responsibility to be part of the solution and we see being part of Climatesure as a step in the right direction."

Phil Denman of Climatesure said: "We know people want to be more environmentally responsible but they're tired of paying over the odds for doing the right thing. Insurance is one area where being responsible is rewarded by lower prices so we're delighted that Climatesure will make tackling climate change a simple and cost-effective part of everyday life."