Solar Developer Insurance Buyer’s Guide

The following are types of insurance common to the solar development process. 

You want to minimize cost while maximizing coverage. As such you should work with an insurance broker who understands your business. 

Your broker should not only manage all the basic business insurance fundamentals, such as general liability, workers compensation, auto insurance, professional liability, etc., but also any specialty insurances, bonds and credit enhancement necessary to protect you:

1. Commercial General Liability Insurance: The standard CGL policy is the lynchpin of a packaged solar insurance program. The CGL protects the company from claims of bodily injury or property damage caused by your company to a third party. If a person walks into your office or onto a jobsite and slips and falls or is hit by falling debris caused by your workers in the course of your business your CGL policy would kick in. Your CGL also provides protection for products and completed operations and liabilities you assume when entering into a contract that contains a hold harmless. Products and completed ops covers damage caused by products your company sells, such as solar panels or the construction of the system. However, products or property owned by others that are in your care, custody and control of an insured are usually excluded under the standard ISO CGL policy form. This gap in coverage can be addressed by inland marine coverage or bailees coverage.
2. Commercial Auto Insurance: Protects your company from liability if your employees get in an accident that injures people in another vehicle while on the job. Also protects your business owned vehicles against physical damage.
3. Hired and Non-Owned Auto Insurance: Hired and non-owned auto insurance is sometimes overlooked by companies when their employees use their own vehicles for work. Hired and non-owned auto (aka “HNOA”) protects your business from liability claims related to the use of vehicles you hire or do not own, such as your employees’ vehicles. 
4. Builder’s Risk: Builder’s risk, also called “course of construction” insurance, is a type of property insurance that protects real property assets, such as homes or buildings, while under construction. Builder’s risk insurance is important because it protects property being built while the job site is active. A builder’s risk policy may be paid for by the general contractor, developer or project owner.
5. Inland Marine: Inland marine is a type of property insurance that covers the tools and equipment that may be used in solar installation. Inland marine covers property while in transit and also at jobsites, even if it stored remotely (be sure to read your policy location coverages and exclusions). If solar inverters or panels are stolen from a jobsite, or damaged, their value can be covered by an inland marine policy. Inland marine may also be referred to as a “floater” policy and may be required for distributors by companies such as SunPower.
6. Property Insurance: Protects you from 1st party losses to personal property and business property, such as the value of your solar PV system, the equipment and the income stream it produces. Solar property insurance covers business personal property (BPP) and business interruption (BI), tenant improvements and other first party property. Property insurance is sometimes packaged together with general liability insurance in a business owner’s policy (BOP).
7. Umbrella: Umbrella or excess coverage provides an extra layer of protection to the insured if the primary layers of coverage are exhausted by a large claim. Be sure to have your umbrella insurance be “follow form”. Umbrella insurance is often less expensive than general liability because the underlying general liability limits must be exhausted before the umbrella will kick in. $1,000,000 of umbrella coverage is common. However, limits of $5,000,000 and up are common in NYC because of the perils of action over claims involving New York Labor Law 240 and 241, especially if there is any exposure to a fall from heights.
8. Professional Liability: Professional liability (aka “errors and omissions”, or E&O) protects you if you’re a solar consultant or if your firm provides solar consulting or if you design systems for others. Even if you sub-contract out your mechanical and engineering drawings to 3rd parties, you still may need miscellaneous E&O insurance. E&O covers 3rd party claims related to professional consulting services and the providing of expertise, advice or counsel. Some solar engineering, procurement and construction (EPC) contractors have full-time installation and engineering crews on staff – whereas others sub-out everything and act more like a general contractor. If your company provides design or consulting services, such as electrical line drawings or structural plans for solar projects, you have some professional liability exposure.
9. Workers Compensation: Workers compensation covers injuries to employees who are injured while in the course of their employment. Workers compensation is mandatory in most states. If work related injuries fall outside of workers compensation, they may be covered by your employer’s liability policy. Solar companies have had challenges with workers compensation because underwriters often misunderstand the actual exposures in different types of solar EPCs, virtual GCs, solar sales organizations and sub-contractors.
10. Solar Offtaker Insurance: Solar offtaker insurance is a form of credit enhancement that transforms unrated solar offtakers into investment-grade offtakers. The insurance is used to reassure lenders, tax equity, or future solar project buyers that the income stream from the renewable energy sold to the offtaker is guaranteed. There are many benefits of solar offtaker insurance, including reducing the cost of capital and increasing the chances that a deal will get done.
11. Cyber Liability: 1st and/or 3rd party protection from damage, or exposure of personally identifiable information (PII), electronic property, digital assets, valuable data and other non-physical assets. May cover ransomware, named and unnamed malware, social engineering/phishing, invoice tampering, hacking and services related to cleanup after a breach. Solar developers that calculate the production of electricity from solar PV systems, manage payments and collect revenue from offtakers are exposed to systems being taken offline by a cyber attack. In the spring of 2019, hackers hit Sustainable Power Group, (aka “sPower”) one of the largest renewable energy developers in the U.S., with a denial of service attack. Hackers gained access to sPower’s infrastructure through a low-level attack on an unpatched firewall from Cisco Systems.
12. Directors & Officers: Also known as D&O, directors and officers insurance protects the company and/or the company’s directors and executive officers and senior management from claims of breach of fiduciary duty or other errors and omissions related to financial decisions. D&O also protects them from claims against their personal assets.
13. Employment Practices Liability: Employment practices liability is often packaged with D&O, fiduciary and crime coverage. EPLI protects a company against claims of sexual harassment, bias or discrimination, wrongful termination or any failure to maintain a safe work environment on the basis of racial, gender, age, religious, sexual orientation or other protected classes, according to the EEOC.
14. Equipment Breakdown: Equipment breakdown insurance provides coverage for machinery or equipment that fails due to accidental internal mechanical failure or electrical causes, such as power surges.
15. Solar Production Insurance: Investors and offtakers rely on projections of future solar production. Performance guarantees to these parties are common and are directly related to their financial exposure. Solar production insurance, aka “energy shortfall” or “solar shortfall” insurance, provides coverage for losses related to physical damage to solar PV systems and other under-performance including weather risks (eg. clouds, lack of sunlight), errors in calculations of revenue models and projected yields on a project and design errors. Solar production insurance guarantees production levels up to a percentage of the projection (i.e. 90% guaranteed production). Solar production insurance can also reduce credit risk for solar financing companies and offtakers and provide increased confidence for investors that solar projects cash will flow as projected.
16. Solar Surety Bonds: A solar surety bond is a three party agreement between you, the client and a surety. The surety guarantees certain performance related to your project and will step in in the event of a default on the performance of the solar development project. It’s preferable for you to use a surety bond vs. letter of credit or cash reserve as a form of reserve because it does not tie up capital or create a liability on your balance sheet. Common surety bonds for solar projects include payment and performance bonds, bid bonds, labor and materials bonds, maintenance bonds, decommissioning bonds and interconnection bonds. 

Every insurance policy contains exclusions. Be sure to read through yours for dangerous exclusions such as a hammer clause or an action over exclusion, among others.