Despite reductions in government subsidies for solar power, the cost of installing solar/photovoltaic (PV) systems has fallen 10% each year since the 1980s. This has meant that more and more owners of both commercial and residential property have installed PV systems.
According to research from Oxford University, solar power could meet 20% of global energy needs by 2027, and so the number of properties with PV systems is set to increase.
However, the insurance risks of solar panels are not widely understood.
“This is an emerging and developing technology which introduces both opportunities and challenges for property owners,” says Mark Middleton, Principal Risk Engineer, Property, EMEA, Zurich Risk Engineering.
We take a look at some key fire risk and insurance considerations for your commercial property-owning customers and Personal Lines customers, who may be considering installing PV systems.
In recent years, there have been reports of a number of fires on domestic roofs, schools and other public buildings, with the PV system or associated equipment often reported as the cause.
In January, a family home was wrecked by a fire believed to have been caused by faulty solar panel installation.
While in August 2014, 92 schools and 27 businesses were told by their supplier their solar panel equipment would need improvements, before it was considered safe to use.
Fires involving solar panels may be infrequent, but when they do occur, they present a number of additional challenges to the occupier, building owner and fire fighters. Additional challenges include:
It is difficult to detect a fire on a roof and solar panels generally do not have automatic fire detection systems. Therefore a fire tends to be well established before it is discovered.
Mark explains: “We have seen many cases where a rooftop fire has been reported by a member of the public, before the occupier even knew they had a problem.”
It is important that your property-owning customers check before installing solar panels, as it may affect their building insurance policies.
10 questions your customers should ask before installing rooftop solar panels
- Does my chosen vendor have appropriately qualified persons responsible for the PV system design, installation and operation?
- Does the proposed location of the PV system increase fire risks (e.g.fire spread on a combustible roof) or introduce problems with structural load?
- Where are the potential ignition sources and how can ignition be prevented?
- Are electrical wiring practices adequate to prevent shorts or other sources of ignition?
- During the operation phase, how will I monitor, inspect, test and maintain the PV system?
- What measures does my system include to detect electrical faults or fires?
- How might a fire spread and can the fire be contained?
- What should my emergency response plan include should a fire occur?
- What information do I need to provide to help fire fighters deal with the fire?
- How would a damaged or faulty item of equipment or PV module be replaced?
Property owners should also advise of any PV systems under the new ‘duty of fair presentation’, that forms part of the Insurance Act, due to come into force in August. In addition, PV systems may alter the value of the property, which may leave a policyholder at risk of underinsurance.
You can play a crucial role by helping customers understand the insurance implications of solar panels, and by encouraging them to develop strategies that can mitigate the key risks they face.
In particular, you should encourage your customers to develop and implement guidelines that manage fire risks during the four phases of a PV system – design, installation, operation, and fault/fire emergency response.
The design phase offers the greatest opportunities to implement improvements that can cover the entire life-cycle of the PV system.
There can be significant advantages to having one vendor who is responsible for design, supply, installation and maintenance, says Mark.
“If you have a single company doing the whole thing, the issues of responsibility are much clearer. If you have a problem, it’s much easier to understand how it should be fixed,” he says.
You should also encourage your customers to engage in discussions with their local fire service and develop a written fire response plan, to ensure they are fully aware of the nature of any hazards posed by the solar panels.
“It is vital anybody considering installing a PV system goes into it with their eyes wide open, and considers carefully what they can do to manage the fire risks,” says Mark.
To discuss any aspect of this article, speak to a member of the Zurich Risk Engineering team or your usual Zurich contact.