Bioenergy, Solar, Wind Power

The Renewable Energy Installer and Insurance

Renewable energy installers in the United States have worked hard over the years to rebuild the fly-by-night reputation that the profession suffered after the 1970s. This is evident from the significant growth in the number of installed PV and small wind systems, due in part to lower component costs and state incentives. However, credit is due to the dedicated installers without whom many of the solar panels would still be in their boxes. The continued growth of PV and small wind in the United States will be largely dependent on maintaining a viable and stable network of these small businesses. However, this goal is threatened by an issue that faces all businesses, but is particularly acute for installers: insurance.

For the past several years, the word on the street is that installers are having a hard time finding and keeping affordable liability and workers’ compensation insurance coverage. In a recent survey of installers in New York State sponsored by the New York State Energy Research and Development Authority, over half of the respondents said that they have had significant problems with liability and workers’ compensation insurance. This is not just a New York problem, as Don Loweburg recently reported in Homepower Magazine* that insurance is an issue for solar and small wind installers from across the country. There are numerous tales of companies losing coverage when their carriers realized that they were in the PV business. Those that do manage to keep coverage and are up front about their work with the insurance company end up paying high premiums. One installer on Long Island told me that he annually pays about $5,000 per employee for insurance. How does this affect the consumer? First, it adds to the overall cost of a PV system because the installer has to include the fixed costs in the labor rate. One installer based in Massachusetts said that insurance can add up to $0.10 per installed Watt of PV. So, for a 2 kW system, insurance adds $200. Second, the high fixed cost of insurance may force some people out of the business and consumers may not have access to a professional for maintenance and repairs. The main cause of this problem may be that insurance carriers do not know what to do with this professional category. As Loweburg noted “many insurers are unfamiliar with and averse to any job title that includes the word solar or wind.” Perhaps these words conjure images of workers hanging off towers or crawling on roofs, despite the reality that the majority of an installer’s time is not spent in these situations. In fairness to the insurance carriers, the professional renewable installer is relatively new (despite the thousands of installations) and there is no readily available dataset of claims history on which to determine risk. Most or perhaps all carriers have no category for solar installers, though the ISO, a supplier of data to the property and casualty insurance industry, has category 99080 for solar energy contractors. One potential solution for this problem is to work directly with the insurance industry to let them know what it means to be an installer. Training and certification, such as NABCEP, should be used to demonstrate the professional quality of the business. In the end, the carriers need to see a ready market so that it is good business for them. Renewable energy installations are projected to grow and there are many individuals that want that business. What we need is to have the insurance companies step up to the plate and offer coverage that is fair for both sides. * Don Loweburg “Feeling the Insurance Squeeze” V 103, pg 110-112 About the author… Chris Sinton is a private consultant based in Middlebury, Vermont. He specializes in renewable energy technologies and materials processing for the glass and ceramic industries. He has been involved in research and demonstration projects in solar, wind, and biomass. As the former director of the Center for Environmental and Energy Research at Alfred University (Alfred, New York) he managed grants from the US-EPA, US-DOE, and the NYS Energy Research and Development Authority that funded research projects including hydrogen storage, fuel cells, recycled/waste materials, and biomass gasification. He holds a Ph.D. from Oregon State University.