As renewable power will dominate India’s energy transition, a huge capacity addition is being undertaken in the country. Renewable energy projects, ranging from large-scale solar farms to community wind initiatives, represent a significant growth area for insurers. For example, the solar power systems that are being built to generate power are expected to last for several years. So, these clean power projects require comprehensive insurance coverage to mitigate various risks, including weather-related damage, equipment failure and business interruption. Hence, securing an adequate insurance cover to protect the system against losses or damages has become crucial for the developers.

Insurance is vital for solar installations across all types of industries including factories, offices and households. Financial losses can be prevented as a significant financial investment is made while installing and protection can include coverage for the cost of repairing or replacing damaged equipment.

Insurance cover is also available for property and individuals when accidents occur during installation or maintenance that cause damages or injuries. Overall, insurance products for solar installations promise to provide cover to protect the investment, mitigate risks and ensure the long-term viability and performance of solar energy systems.

Now, at least half a dozen companies, including public and private players, offer insurance coverage for various risks associated with solar power plants and other renewable power projects. The companies include New India Assurance, ICICI Lombard General, Cholamandalam MS General, Tata AIG General, HDFC Ergo, and Iffco-Tokyo. “Insurance is very vital for solar installations across all types of industries, factories, offices and households. We at Chola MS have designed a package policy that covers solar panel installations. Solar insurance operates as an extension of property insurance. While property insurance may cover the building or structure where the solar panels are installed, solar insurance focuses explicitly on covering the solar energy system itself,” explains V Suryanarayanan, Managing Director, Chola MS General Insurance Co.

Wide range of risks

Chola’s solar insurance policies cover wide range of risks from damage or loss due to natural disasters like storms, hurricanes, hail, or fire. They may also include coverage for theft, vandalism, electrical or mechanical breakdowns, and accidental damage with additional optional coverage for transportation and installation of solar panels, coverage for specialised solar equipment or technology or coverage for system performance guarantees.

ICICI Lombard, one of India’s leading general insurers, says it provides a 360-degree comprehensive risk solution approach to the renewable energy segment. It has specialised insurance solutions for the solar and wind energy sectors. “In solar projects, solar panels contribute almost 60 per cent of overall cost and are the mainstay of solar energy generation. We offer photovoltaic panel warranty insurance, covering solar panels up to 10-12 years of product warranty and 20-25 years of performance warranty, focusing on protection against manufacturing faults, material defects and abnormal wear and tear,” says Gaurav Arora, Chief – Underwriting & Claims Property & Casualty, ICICI Lombard.

Four sectors

The company has broken the renewable energy risk life cycle into four major segments — transit risk, project execution risk, operational risk and specialised risk. It offers coverage for each one of these categories.

Top general insurer New India’s solar energy insurance policy is sold as a package and protects the seller and buyer. The sales cover ensures the PV modules of specific sales contracts, which can be chosen by the manufacturer. The buyer’s cover allows the buyers of PV modules to claim from the insurer in the event of the manufacturer’s insolvency.

Solar coverages vary for huge industries and ₹400-500 crore for normal mid-sized. This depends on the size and value of the solar energy system, the location of installation, the level of coverage required, the deductible chosen and claims experience. “Chola MS is actively developing specialised insurance products tailored to the unique needs of renewable energy developers and operators. By leveraging expertise in risk management and underwriting, we aim to become a trusted partner for renewable energy stakeholders,” says Suryanarayanan.

Renewable energy projects represent a significant growth area for insurers since these require comprehensive insurance coverage to mitigate various risks. As the sector holds immense potential with favourable growth outlook, more players are likely to enter this segment soon with new and innovative schemes.

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