Solar Property Insurance solar panel insurance

Solar Property Insurance

Solar property insurance protects utility scale and large commercial, industrial solar photovoltaic systems against physical loss, or loss of business income.  

Hail, wind, fire, flood and earthquake are just a few of the perils that solar project owners may be exposed to.

Solar project owners and developers need property insurance to protect their investments, minimize downtime, ensure continuity and provide critical financial assistance in the event of a loss to their property.

Covered solar property includes physical assets such as the solar panels (photovoltaic systems), racks, inverters, batteries, monitoring, technical equipment and more. Other covered assets may include installation equipment, machinery, tools, office furniture, computers and equipment.

For large solar developers and EPCs, the best approach is to have your insurance broker develop a complete insurance program under which new solar projects can be scheduled each time, for an incremental additional premium.

In addition to physical property, solar property insurance can also cover business income from solar projects, including renewable energy certificates (RECs) and other sources. 

Solar property insurance should be written on a special form, also known as an “All Risk” property policy, which means that the insurance covers any risk except those that are specifically excluded in the form. Perils may be expanded to cover particular additional risks such as theft, earthquake, flood, cyber risks and terrorism, that are often excluded from property policies.  Inland marine or floater property insurance can be written for equipment held on site, in transit or held for others.

Solar Panel Insurance

Solar panel insurance covers most perils. However, some states, such as California and Florida, may specifically exclude perils such as earthquake, wind and/or flood, or have additional insurance nuances.

Depending on where you are located, you may need a specific earthquake peril endorsement added to your property policy for an additional premium. 

Optional property insurance may include coverage for property that is in your care, custody and control, or during maintenance. An example of this would be if you were responsible for solar panels, racking, inverters or other equipment owned by a customer prior to installation. 

You may insure your property at “actual cash value” or “replacement cost”. The former is what your property is after depreciation, the latter is what it would cost to replace new. 

Solar property insurance is often referred to as an “all risk” property policy or a “special form”. 

This type of solar property insurance, should not be confused with solar offtaker insurancesolar production insurance (aka “solar shortfall” insurance) nor should it be confused with solar general liability insurance or an umbrella policy or personal liability policy.

Business Income

As mentioned above, commercial, industrial and utility scale solar project owners can protect the business income streams, such as offtaker payments and REC income, from their commercial solar systems with property insurance. 

Business income coverage (aka “business interruption”) can be added to cover the value of revenue in kWh or MWh production related income. This can be added to the “Special” Form (aka “all risk”) property insurance for comprehensive solar property insurance coverage. 

Inland Marine and Builder’s Risk

Inland marine insurance covers business property in transit, to be installed, fabricated or erected during an installation phase, or construction process, of a building being renovated, upgraded or remodeled.

Inland marine insurance covers the solar business property, such as solar equipment (panels, inverters, racking systems, storage, etc.) or tools and equipment, that is owned by a developer, EPC or solar contractor, or through a partnership with a solar supplier, such as SunPower. The property may be permanently owned by the solar contractor or it may be property that is to be installed, fabricated or erected for the client… However, if the latter, the property is not yet a  part of a permanent installation.

Inland marine may also be referred to as a “floater” policy. This term is used because coverage “floats” with the property and may without regard to the location of the property covered. It may be possible to include the cost of labor during the installation process, however, this may be a supplemental coverage for an additional cost, and/or with a builder’s risk policy.

A floater is typically written on the IM 7100 form1, a “special perils” (also known as an “All Risks”) form. Special perils means that the installation floater covers any risk except those that are specifically excluded in the form. Examples of excluded perils may include flood, earthquake, fraud, missing property, etc.

Builder’s Risk

A builders risk policy is different than an inland marine policy. Whereas installation floaters will NOT cover buildings and other real property, a builder’s risk policy covers buildings that are under construction. A builder’s risk policy can also cover business property and also lost income or time invested in a project that is lost due to a covered cause of loss.

Like an installation floater, a builder’s risk policy is written on a “special perils” (also known as an “All Risks”) form. Special perils means that the installation floater covers any risk except those that are specifically excluded in the form.