Farm Insurance for solar panels is an important risk to consider within any farm insurance program. With the increasing cost of power and reliability during peak periods, farmers are looking for energy alternatives to better manage their power requirements.
Solar is fast becoming a standard energy alternative for farms, as it suits the peak demand of a number of farming operations. It is also popular for running water pumps where the distance and locations of pumps can difficult and expensive for the connection of mains power.
From an insurance perspective it’s important to consider;
- How the solar panels are installed on the farm
- How the solar panels are being used on the farm and;
- The financial impact to the farm in the event of insured loss or damage
The Sum Insured Of Farm Solar Panels
The first consideration is the sum insured for the panels and associated equipment. Many farms have had access to government grants which may not be available should replacement be required. The full replacement cost of the panels, freight and installation should always be included within the sum insured.
The Location Of Farm Solar Panels
The location of the panels is important, as panels could either be
- Fixed to existing farm sheds
- Free standing supplying power for water pump systems
- Ground mounted as part of a whole farm power supply system.
The location will determine the best method to insure the panels within an insurance policy. They could be considered as part of the overall building sum insured which can include fixed power, water and gas within some policy wordings. Alternatively, they could be insured as part of the water pumping system which includes the power supply or more commonly insured as a separate listed item.
The Use Of Farm Solar Panels
It’s important to understand the use of the panels and how they being used to supply power to the farm. Is the unit completely off the grid, dual switching set up or used for individual water pumps/irrigation equipment. The use helps determine what the potential financial impact could be in the event of insured loss or damage to the solar system.
Farm Financial Impact
Farm Business interruption insurance cover may not be considered when discussing the use of solar panels but the conversation should not be any different than any other essential services that the farm utilises.
The financial impact can vary depending on the use of the panels on the farm. Some panels could be used to supply stock water to locations that aren’t always used throughout the year, whereas some panels could be used to supply power to a 60 unit rotary dairy with battery storage.
In the event of loss or damage, not only could a farm incur financial impact from a reduction in production but it could also incur additional power and generator costs to maintain the farm operation while the panels are reinstated.
Power supply is always something that should be discussed as part of the farms business interruption cover as their use, ability and timing to replace is an important factor to consider.
Farm Insurance Policy Wordings
Coverage in the market varies with a number of farm insurers . Some insurers include cover for solar panels within the building sum insured as part of fixed services while others require solar systems to be specified under specific policy sections.
How they are insured under the policy can also effect the cover provided, as some farm insurers will provide Accidental Damage cover while others limit the cover to Defined Events only.
An ISR farm insurance policy can include cover, so long as it is listed within the declared asset schedule. It’s important that the Accidental Damage sub-limit is adequate within the policy and that the business interruption cover is tailored to cover such financial risk exposures.
Farm Insurance for solar panels can be quite complex and it’s important that you deal with farm insurance broker who is highly experienced in agricultural operations.