Buying solar panels is one thing – making sure they work efficiently and also hanging on to them is quite another matter. By definition, the panels have to be in an unobstructed area with relatively clear access for maintenance. That means theft is a serious risk, especially as the price of energy continues to rise. Theft of solar panels rose 17% in the US from 2008 to 2009 reports SolarInsure, a Costa Mesa, Calif. company.
With the number of households owning solar panels doubling every few years, companies are springing up to offer solar insurance. Naturally buying insurance is a risk in itself – the premiums are usually too high, and the insurer may not pay out even if you do suffer a problem not of your making. They also offer insurance against another big risk facing owners of solar panels – that the installer is not around to honor its guarantee in five years time or so, if the panel develops a fault.
The Travelers Cos. has broadened its insurance coverage for small-scale use of solar panels on homes and a growing number of commercial solar farms.
Travelers has provided insurance for solar- and wind-energy technology for about 10 years, and aspects of previous policies are included in the new policy with additional coverage.
The SolarPak was designed to bridge what had been segmented coverage for solar energy – just the manufacture of panels, just the transportation or just the installation. The new policy is designed to cover the entire timeline of a solar project: from the day a site is designated to the transportation of panels to the site, and installation and, finally, the stage when a solar panel is functioning and converting sunshine into electricity.
The process of finding an appropriate site for a solar installation takes time and research. Weather-data equipment, for example, is usually hauled to the site to gauge sunlight. The SolarPak policy could cover that weather equipment along with a builder’s risk when panels are installed or theft once the panels are up and running.
Schools are among the most vulnerable to theft, says Tim Holmes, ceo of GridLock Solar Security. “If you try to get into a school nowadays, there are barbed gates. They’re like Fort Knox,” Holmes says. “But the $1 million in solar panels on the roof, fastened with just four bolts each? They’re just sitting out there unsupervised.”
As a safeguard against solar theft–particularly common in GridLock’s home state of California–the Santa Rosa-based company sells trigger cables that stitch panels together. If a thief attempts to cut a cable, up to eight people–typically security guards and maintenance staff–are contacted by phone or text within seconds.
Part of the reason for rewriting policies for solar energy, and to provide coverage where gaps existed, is rapid growth in the industry. The US American Recovery and Reinvestment Act made $80 billion available last year for “clean energy investments.” In the UK the new Feed-in tarriff has spurred growth.
April 2010, the US Solar Energy Industries Association released its annual report showing that overall solar capacity grew by 37 percent, and doubling the residential market. Revenues for the solar industry were $4 billion last year. Connecticut ranked ninth among states for new solar capacity added last year, behind Massachusetts, according to the solar association.
“I think we all expect it to just keep growing,” said Lauren Berry, chief business development officer at Travelers Inland Marine, a subsidiary that handles all the solar policies. “You see traditional energy companies diversifying into renewable, or creating divisions for renewable. … You see, let’s say, an erecting operation is now getting into wind turbines. … You see roofers getting into solar panels.”
A leading cause for claims in California, which led all other states in solar expansion last year, was theft. The materials used in photovoltaic panels – the ones that convert sunshine into electricity – are a hot commodity, Berry said.
For homeowners, insurance for solar panels would be a separate add-on to cover the panels, which range in value from $10,000 to $15,000.
Berry said, “With the increased interest in power generation technologies that are considered ‘clean,’ the availability of renewable energy financial incentives and continuous innovation in the multiple applications of solar technology, the SolarPak coverage may help to open up new business opportunities for our network of independent agents and brokers.”
Different types of PV insurance
Even though solar insurance products and standardized yet, demand for pv insurance is increasing. In general large PV systems require liability and property insurance, and many developers may opt to add policies such as environmental risk insurance.
1. General Liability Insurance
General liability Insurance covers policyholders for death or injury to persons or damage to property owned by third parties. General liability coverage is especially important for solar system installers, as risk is greatest during installation.
2. Property Risk Insurance
The solar system owner usually purchases property insurance to protect against risks not covered by the warranty or to extend the coverage period. The property risk insurance often includes theft and catastrophic risks.
3. Environmental Risk Insurance
Environmental damage coverage indemnifies solar system owners of the risk of either environmental damage done by their development or preexisting damage on the development site.
4. Business Interruption Insurance
Business interruption insurance is often required to protect the cash flow of the solar project.
Do you really need PV insurance?
Rely on manufacturer warranty?
Realistic or not, often there are concerns about the warranties offered by solar panel manufacturers. What if there’s a defect in the pv system in 10 years, will the solar panel manufacturer still be around to help?
Chinese solar panel manufacturers in general offer guarantees, which are backed up by the manufacturer itself or by one or more Chinese insurance companies.
Regular solar panel guarantees are:
5+ years product warranty
10 years – 90% performance output
25 years – 80% performance output
How solid are guarantees offered by Chinese solar panel manufacturers?
Quite solid, however it depends on your choice of solar panel manufacturer. Let’s divide the pv manufacturers in two groups:
The first group of solar panel manufacturers offers guarantees that are backed-up by a consortium of Chinese insurance companies.
The second group of solar panel manufacturers takes responsibility for the insurance themselves, by including the risk on their balance sheet. Regardless which guarantees are offered, the validity depends on the manufacturer’s own (future) ability to solve defects. In case the manufacturer would go bankrupt, there might be a problem.
In case a solar system is under-performing or certain pv panels are defect, under the guarantee conditions, the manufacturer will support in the form of solar panel replacements or additional pv power.
Still high performing in 15 years?
Property insurance typically covers solar system components beyond the terms of the manufacturer’s warranty. For example, if a PV module fails for reasons covered by and during the manufacturer’s warranty, the manufacturer is responsible for replacing it, not the insurer. However, if the module fails for a reason not accounted for in the warranty, or if the failure is beyond the warranty period, the insurer must provide compensation for the replacement of the pv module.
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