Solar Innovators Unite: Firedart’s Commercial Pv Insurance Launch Shines Light On The Future Of Solar Energy

Insuring Photovoltaic Plants

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There is no doubt that most (if not all) South Africans are completely fed up with
the concept of load shedding.  Most of us, also just want a cheaper, greener
energy source. If you are like most of us, then you have probably considered
solar energy for your home and/or business.
It is not surprising then, that the solar panels you see mounted on rooftops or
ground mounted ones in solar farms are becoming a more common feature of
the South African landscape. Termed photovoltaic energy, this type of
technology continues to improve over time. While you may have considered the
cost of installation – I am sure the cost of insuring this tech has been an
afterthought. But have you considered what would happen in the event of theft
or damage to the panels or your battery or inverter? If this does occur (even
during the transit, construction or operational phase), it could mean a huge
chunk of additional expense, not only in cash but time as well. This is where
insurance comes into play.
What is covered?
Usually, PV insurance covers the plant that is installed and will also cover the
technical peripherals such as:
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Solar modules including supporting structures, cabling, installation and
connection sets
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Power inverters, transformers, charge converters and energy storage systems
(e.g. accumulators)
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Export and generation meters
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Monitoring components and overvoltage protection equipment (e.g. remote
surveillance PC’s )
Types of losses associated with PV plants
It is very important to consider what could cause a loss to a PV plant before
considering the type of cover that is needed. In our experience at Firedart, the
major causes of losses we are seeing thus far are theft, vandalism, lightning, and
fire. Other losses include collapse and structural defects. The most frequent
cause of loss for solar equipment we are seeing is hail, wind and fire.
Cover available for PV plants

It goes without saying the adequate insurance cover is key to mitigating risk. It is
important that the systems installed should comply with applicable SANS
requirements, manufacturer’s specifications and engineering standards. For
most insurers to provide cover, this would be a first requirement.

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1. Erection All Risk
Business operators should require PV system service providers (installers or
engineers) to provide proof of adequate general liability and professional
liability/errors-and-omissions insurance coverage. Rather than rely on contracts
that set minimum levels of insurance, however, even small commercial insureds
should work with a broker knowledgeable about the insured’s business and
exposures, including their PV system, to ensure appropriate coverages at a fair
price and to tap into any available expertise for better managing overall risk.

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2. Operational All Risks Cover
Operational All Risks would insure the PV equipment and systems whilst in
operation. This would indemnify insured in respect of accidental physical loss or
damage to photovoltaic property for the repair, replacement, reinstatement or
making good of property insured. This would generally cover property damage,
machinery breakdown and have a component for public liability.

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3. Business Interruption Cover
This type of insurance covers the loss of business income or of incurring an extra
expense in cases where businesses are unable to operate. If an enterprise relies
on a PV system to supply its power and a mechanical or equipment breakdown
occurs, this could put the system and the business out of operation for lengthy
periods. Separate policies are available for PV system mechanical or equipment
breakdown that can bridge this coverage gap. Many insurers also cover fire perils
under this section.

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4. Performance Warranty
At Firedart, we provide cover when a reduction in the declared energy yield
occurs. If this reduction occurs beyond a stipulated percentage, Firedart will
reimburse the insured for this reduced yield.
Other considerations

Most buyers of insurance focus on the premium required and cover provided.
However, there are other very important matters to consider: claims handling
and risk management. Claims handling can be critical recovering from a loss.
Some insurance companies and underwriting agencies have expert claim
handlers that specialise in PV insurance and can help make the process run
smoothly.

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An insurance company’s claims-paying ability is also as important as low
premium rates. Some insurance companies might compete on premiums, but
when claims do occur, they could be slow to respond or could even become
combative. Other insurers might not offer the lowest premiums but might have
strong reputations for being responsive when claims arise.
Specialty insurers with experience in PV plant exposures and claims often
maintain specialized risk management knowledge that help insureds better
manage exposures and reduce their potential for loss. This can help insured to
prevent losses and/or costs when a loss occurs.

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Conclusion

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South Africa’s solar energy potential is amongst the highest in the world. As solar
energy becomes more viable and cost effective, insuring these assets is
important. As we gain more experience in this exciting area of PV technology, I
expect the insurance offering to be more competitive, widespread and tailored. I
also think brokers / agents will become more knowledgeable about not only the
insurance offering but the varied tech that is on offer. Indeed, an exciting time to
be in this space!