Your Guide to Insuring Solar Panels on Commercial Buildings

April 11, 2024

The growing popularity of C&I solar in the USA raises questions related to insurance. Businesses that own commercial buildings and plan to invest in solar energy require a clear understanding of solar panel risks and available solar installation insurance.

While the decision to use solar energy may be economically beneficial in the future, it initially requires significant financial investment. In the event of an unforeseen situation, losing this money is an undesirable outcome for any business.

In this article, we’ll tell you whether insurance can cover damage to solar panels on commercial buildings and discuss the most common types of coverage.

What Is C&I Solar?

Solar C&I refers to the use of solar panels and other photovoltaic (PV) systems to generate electricity at sites:

  • Commercial: offices, shops, restaurants, hotels, schools, etc.
  • Industrial: factories, warehouses, manufacturing plants, etc.

If you are considering commercial solar panels, conducting thorough research and assessing your needs and goals is important. In particular, think about initial investments, the availability of suitable installation locations, financing options (credit, leasing, and power purchase agreements), and more.

Commercial Solar: Risks Associated with Solar Panels

Solar energy is a lucrative niche for buildings of any purpose. It can potentially reduce tax bills, improve the environmental situation, and eliminate dependency on state electricity supplies and outages.

As we can see from the chart provided by IEA, solar C&I is gaining momentum every year and shows no signs of slowing down, even compared to the residential sector.

Risks Associated with Solar Panels

Source: IEA

Installing solar panels can be beneficial for commercial enterprises, but it’s essential to be aware of the risks associated with it.

Positive Impact1. Reducing the risk of power outages. Solar panels provide backup power during electricity outages, helping to avoid productivity losses and damages.
2. Decreasing the risk of fire. Solar panels are a safe energy source, and their installation minimizes the fire risk compared to traditional energy sources.
3. Lowering the risk of environmental damage. Solar energy is an environmentally friendly source, so using it reduces greenhouse gas emissions.
Risks1. Damage from natural disasters. Solar panels are not always resistant to strong winds, hail, etc.
2. Theft. The value of equipment attracts thieves.
3. Roof damage. Installing solar panels can damage the roof if not done correctly.

Therefore, it’s important to carefully and comprehensively assess all risks of installing solar panels before making a decision. Despite this, the idea of providing a commercial enterprise with solar energy remains attractive.

What can you do in such a case?

Try to minimize risks and maximize benefits by following these tips:

  • Obtain commercial solar insurance that covers risks
  • Use high-quality solar panels and equipment
  • Find a qualified contractor for the installation
  • Conduct initial technical maintenance

When it comes to insurance for solar systems, make sure you take care of it during the purchase and installation process.

There’s no denying that commercial solar panel insurance can help you achieve peace of mind. For instance, if your solar system gets damaged due to an environmental disaster, this solar panel insurance will solve these problems in full and guarantee the safety of your investments.

Does Commercial Property Insurance Cover Solar Panel Systems?

There is no definitive answer, as it depends on several factors. Some solar insurance companies consider solar panels a separate category that does not fall under existing types of insurance. That means you may have to either take out an entirely new insurance policy or get additional coverage.

Let’s examine the main factors affecting the possibility/impossibility of getting coverage by a commercial solar panel insurance policy for autonomous solar energy systems.

Factor #1. Specific Insurance Policy

Not all standard commercial property insurance policies automatically cover solar panels. Some companies may consider them personal property or state that you must get a special policy or supplement. Many insurers offer specially designed supplements, which typically cover damages from theft, vandalism, weather events, and voltage fluctuations.

Factor #2. Location of the Commercial Enterprise With a Solar System

In reality, all U.S. states practice solar panel insurance, but some have specific rules regarding coverage. This is due to local risks of various formats (state weather standards, crime rates, proximity to power lines), which can affect your coverage and its cost.

We recommend considering this and comparing different coverage options available in your state. Also, inquire about the requirements of the state where the commercial enterprise is registered, not the owner’s home state.

Factor #3. Specific Insurance Company

Don’t lose hope if your insurance agent cannot offer adequate coverage. As we mentioned, not all companies offer solar panel insurance coverage. Therefore, compare offers (including cost and type of coverage) from different providers to find one with sufficient legal experience in such insurance.

One of the reasons for such an approach by companies to insuring solar systems could be the major fires that have occurred in recent years and affected commercial giants like Walmart and Amazon. And although these are isolated incidents, the losses were substantial.

Factor #4. Desired Type of Coverage

Insurance companies mainly offer two possible scenarios:

  1. Take out full coverage, protecting your investments in the solar system. The solar insurance company will pay out funds for various risks, such as weather conditions (hail, earthquake, rain), deliberate vandalism, fire at the enterprise, and more.
  2. Take out limited insurance coverage. You will only get money in cases explicitly stated in the policy, making your investments more vulnerable. However, if you consider the listed risks relevant, this option can be excellent for you.

Factor #5. Scaling Your Solar System

If you have an overly extensive or complex solar system, in 90% of cases, you will need to take out a new policy. Furthermore, the value of your system determines the coverage limit. Because then, various factors significantly increase the likelihood of damage to solar panels.

Cost of Solar Panels for Commercial Buildings

Cost of Solar Panels for Commercial Buildings

The business’s aspiration for sustainable development is both an urgent need driven by an innovative vision of the future and a personal desire of entrepreneurs who build strategies based on trends and factors of societal transformations.

Companies aligned with these ideas can easily begin to harness solar potential. However, it should be understood that initial expenses will be quite high; one should be prepared for them.

The first thing to consider is the commercial solar panels cost, which will depend on their type, system scale, and the location of the business. The average cost of commercial solar panels is around $2-4 per watts. This means that the commercial solar installation cost for a system with a capacity of 100,000 watts (according to the U.S. Department of Energy, the minimum for a solar system that can be considered commercial) will amount to around $200,000-$400,000.

Such capacity may suffice for covering the energy needs of small businesses, but for large enterprises, expenses can reach millions.

Additionally, you should not forget about solar insurance costs. It is also variable, as it depends on the broker, the concept of C&I projects, the type of coverage, and other factors.

Options for Insurance for Solar Systems on Commercial Buildings

Insurance companies offer a wide range of thematic proposals. However, to make an informed decision about solar installation insurance, let’s understand the specifics of different types of coverage.

Solar Liability Insurance

Solar liability insurance provides comprehensive protection to help safeguard yourself and your business. Here are the two most common types of solar liability insurance:

  • General liability insurance: It covers expenses related to death, injury, or property damage associated with installing or operating solar panels.
  • Professional liability insurance: It protects against client claims related to negligence or errors during installation.

Liability Insurance for Solar Panels

Utilizing solar energy from panels on a commercial property saves money, offers multiple benefits, and entails additional responsibility for the owner.

Imagine strong winds or a sudden fire damaging the panels, causing harm to people or property nearby. This type of insurance comes to the rescue, covering medical treatment, property repairs, and legal expenses. Policies typically offer at least a million in coverage. It is recommended to consult with a professional to determine the optimal coverage amount for the specific case.

With insurance, you can rest assured that you won’t be solely responsible for all losses in case of unforeseen events. Perhaps your general liability insurance already includes solar panel insurance coverage; if the coverage amount is satisfactory, it’s excellent news.

Solar Rooftop Insurance

The benefits of solar panels on roofs include reduced electricity bills, prevention of power outages, increased property value, and enhanced company reputation.

However, while investments in solar roofs are becoming increasingly popular, they appear risky to insurance companies. This is because the technology is still relatively new, and there isn’t much data on its long-term reliability.

Options for solar rooftop insurance include:

  1. Commercial property insurance: It’s essential to carefully examine its terms to ensure that solar panels for commercial property are included in the coverage.
  2. Utility interruption insurance: This helps compensate for lost income if your business directly relies on the continuous operation of the panels. This option is particularly beneficial for businesses located in regions with unstable weather.
  3. Equipment insurance confirmation: By having confirmation, you’ll ensure coverage of up to $5000 for your solar roof. Note that it can be added to the general liability policy.

Solar Farm Insurance

Like any other type of investment, solar farms require protection because risks inevitably arise during the construction and operation phases. Solar installation insurance can help in both cases.

Insurance during the construction phaseIt covers losses related to equipment damage or adverse weather conditions.
Insurance during the operational phaseIt compensates for income loss associated with solar power station downtime. It covers losses caused by theft, extreme weather conditions, or breakdowns.

In any case, with insurance for solar farms, you will be protected from terrorism and liability to the state. In addition, you will simultaneously preserve your investments and increase the trust of investors and partners in you and your commercial organization.

Solar Power Plant Insurance

Solar power plant insurance reimburses you for losses caused by theft, fire, extreme weather conditions, or other events. It also covers your liability for damage to third-party property or injuries caused by your solar system.

However, the most interesting aspect is that the insurance company will cover your expenses for renting an alternative energy source in the event of station damage. Considering this, the solar station owner and financiers who need to ensure the existence of a policy before making decisions about financing C&I projects may require such insurance.

Business Interruption Insurance

You invested in solar panels to save on electricity bills and make your business more environmentally friendly. But what if your system fails? Business Interruption Insurance protects your income if you lose sales due to damage or malfunction of solar panels. This happens in three stages:

  1. You choose a coverage amount corresponding to your projected income from solar panels.
  2. If your system fails, you file an insurance claim.
  3. The solar insurance company reimburses the lost income for a certain period, usually up to 12 months.

Environmental Risk Insurance

Solar panels for commercial property are an economical and environmentally friendly way to obtain energy. However, it is important to remember the potential environmental risks associated with their operation.

There are separate types of solar panel insurance policies that can address them. The first is liability insurance, which compensates for losses caused to third parties due to pollution. The other is loss-stop insurance, which compensates for the costs of any further environmental cleanup work.

Commercial Solar Panel Insurance – Your Guarantee of Reliability

Insuring solar panels on commercial buildings is a crucial step to protect invested funds from unforeseen losses. Not all commercial solar panel insurance policies automatically cover solar panels, so it is worth carefully studying and understanding the nuances of the proposed coverage.

Knowledge is power, and a proactive approach to insuring your solar panel system will preserve your peace of mind and protect your investments for years to come.

Frequently Asked Questions

What should I do if the solar insurance company denies coverage or demands high premiums for coverage?

Try to convince the legal representative by providing drawings of the commercial solar project and considering proposals for changes. This is important because the insurance agent will know the coverage status before construction.

What should I pay attention to before officially concluding the policy?

First, consider all the proposed types of coverage to ensure full protection. During the discussion, find out if commercial solar panels are included in your existing property insurance, what risks are covered, what coverage limits apply in case of losses, and finally, clarify the cost of additional coverage.

Who should I contact regarding solar panel installation insurance?

You can contact your insurance agent or another company. You can also consult with experts from CoverExplore.

Victoria Berezhetska

Victoria Berezhetska is a Content Lead at Phonexa.com and an expert contributor to CoverExplore. She has a Bachelor of Science degree in Business Administration, with extensive working experience as a PR specialist and content writer. At CoverExplore, she helps customers find the right educational material through easily digestible blog posts and buying guides backing their insurance coverage choice. Victoria covers diverse topics around digital and insurance marketing, including auto, home, health, and life insurance.

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