Insured is a loss which is caused by an unforeseen event while not being excluded by a specific named peril. Examples for insured perils are high voltage, short circuit, natural hazards and other forces majeure. Errors in operating are insured too and it is important to know that the insurer will not seek recourse at the employees who performed the faulty operation.

Not insured perils are among other nuclear energy or loss caused deliberately by or due to gross negligence of the insured or its representative. As already mentioned concerning insured interest, loss for which the supplier or the repair workshop are responsible or liable is not insured (supplier’s guarantee). Direct consequence of permanent influence from operation, e. g. wear and tear, is not insured because it is not unforeseen.

Indemnification and Business Interruption

After having mentioned all the conditions which have to be fulfilled, now it is of interest how indemnification is made up. In case of a damage the insurer will compensate the reinstatement cost to the pre-loss condition. This is repair work and related cost. The Insurer will compensate repair work and replacement of parts as well as freight.

Additional cost for overtime, work on Sundays and public holidays and work over night will also be compensated. As the insurance policy includes indemnification for loss through business interruption, the insurer is interested to minimize this period and will compensate for this additional cost through acceleration measurements.

If the damage causes a loss to other items which are not insured, these cost may be insured too. Examples are clean-up cost and cost for earth-works as well as debris removal and disposal cost. Here is to observe that there exist indemnification limits per event. If own personal is deployed for repairing the damage, the cost will be compensated, too.

Alterations and improvements of the installation will not be compensated.

In case of a damage, the reinstatement of the system is arranged and is no further risk for the operator. Now, there is the problem that the financing is running on, but it is not possible to earn money with the installation. For this reason, the Policy includes an insurance for business interruption.

Compensated will be lost in charge according to “Zweites Gesetz zur Anderung des Erneuerbare-Energien-Gesetzes vom 22. Dezember 2003” which is the German Renewable Energies Law. Now it is obvious why the insurer pays additional cost to accelerate the repair works. The insurer is interested that the installation comes back to an operating condition as soon as possible.

Important is to observe that there is only an indemnification if the business interruption is a consequence of an insured property damage and all conditions mentioned above are fulfilled. Other reasons for business interruption as revision works will not lead to indemnification.

In particular cases it might be possible to insure decrease of receipts due to lessened solar radiation. For this additional insurance two independent certificates about the solar radiation at the location of the photovoltaic system are required what is worthwhile for bigger systems (or plants of systems) only. If this insurance is taken out, the insurer participates when there is loss in earning due to unfavorable weather.

There are limits in indemnification: In case of a total loss, the insurer will pay the current list price but maximum EUR 5.000 to EUR 6.000 per kW peak (depending on size of installation). The Duration of liability in the business interruption insurance is 6 months, beginning at the date of the property damage.

The best is, if there is no claim. To assure that the operator does his utmost to avoid claims there exist deductibles which differ according to the size of the installation and which have to be borne by the owner or operator.

Obligations

For insurance coverage there are several obligations which have to be fulfilled as meeting the maintenance instructions or the immediate notification of a claim. Damaged parts which are replaced have to be kept in stock until the Insurer has settled the claim. If parts are damaged they must not be used further on without the consent of the insurer.

If there is a change in operation or application of the system, the Insurer has to be informed in advance because the change can result in a change of the risk which is borne by the Insurer.

Best is, if insured act as if they had no insurance, meaning the loss is minimized wherever possible.

Conclusions

Marsh has developed a highly efficient policy for controlling the main risks of photovoltaic systems. It is not required to take out different fire, machinery breakdown or business interruption insurances but you receive all from one source and it is tailored to the requirements of owners and operators of photovoltaic systems.

From the coverage of property damage as well of pure financial loss due to business interruption results a planning and financial balance security.

The reduced risk for the owner and operator means also a reduced risk for the company financing the project. Just in recent years it appeared that banks consider very strong before they deal in credits. When the risk is clear and manageable as for example through a comprehensive risk management, it is easier to find a financing partner.

Disclaimer

This presentation is for introduction of the insurance program developed by Marsh for owners and operators of photovoltaic systems. It is a summary with informative translation and it is not describing completely the German policies which are written in German language and negotiated with insurers. Without further explanation it can lead to misunderstanding.

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