Insurance Requirements

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To protect against damage to your system and damage caused by your system, a property owner should secure insurance. Two types of insurance are required: property damage, which protects against damage to the wind system and liability insurance to protect you against damage caused by the system.

Insuring Against Property Damage

For homeowners, the most cost-effective way to insure a wind system against damage is under an existing homeowner’s insurance policy. Businesses can cover a system under their property insurance.

When installing a system, contact your insurance company to determine if your current coverage is sufficient. If not, boost the coverage to cover replacement, including materials and labor. Wind systems are insured as “appurtenant structures” on homeowners’ policies. An appurtenant structure is any uninhabited structure on your property not physically attached to your home. Examples include unattached garages, sheds and satellite dishes. Appurtenant structures are assessed and charged at a lower rate than occupied structures. Insurance companies usually base premiums for appurtenant structures on the total cost of materials plus the labor to build the structure.

It is best, although a bit more expensive, to insure a system at its full replacement cost — not a depreciated value. Wind energy systems can easily last two decades or more. Systems should have insurance coverage that includes damage to the system itself from “acts of nature,” plus possible options for theft, vandalism or flooding.

Insuring a wind system is relatively inexpensive. While home insurance coverage should cover appurtenant structures, added insurance may be required. It can be purchased for an additional premium.

Liability Coverage

Liability insurance is also part of homeowner’s or business owner’s insurance policy. It protects against possible damage to others caused by a system. For example, it would cover you if neighbors claimed their electronic equipment was damaged because of your grid-connected system. (Your system would somehow have to be able to magically send power onto the line to damage electronic equipment in a neighbor’s home. This, of course, is not possible.) It
also covers personal injury or death of employees due to electrical shock from a system when working on a utility line during a power outage. Even though the likelihood of these events is nil, because of the automatic disconnect feature built into inverters, utilities may insist on this coverage. Don’t resist them.

Liability coverage is relatively inexpensive. In most places, liability coverage for homes runs from $100,000 to $300,000. In most areas, increasing liability coverage to $500,000 may add an additional $10 to an annual premium. Extending coverage to $1 million may add $35 to $40 more to the annual premium. The utility will likely dictate the level of liability insurance that it requires as a condition for interconnection. If the amount required by the utility
seems unreasonable to you, consider appealing to your state’s public utility commission. A utility may simply make a recommendation. Dan’s rural electric co-op at his educational center, The Evergreen Institute, recommends $1 million liability.