Rancho Mesa's Alyssa Burley and Account Executive Kevin Howard discuss mitigating risks for solar installers with professional liability insurance.
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Director/Host: Alyssa Burley
Guest: Kevin Howard
Producer/Editor: Megan Lockhart
Music: "Home" by JHS Pedals, “News Room News” by Spence
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Transcript
Alyssa Burley: Hi. This is Alyssa Burley with Rancho Mesa's Media Communications and Client Services Department. Thank you for listening to today's top Rancho Mesa News, brought to you by our Safety and Risk Management Network, StudioOne. Welcome back, everyone. My guest is Kevin Howard, Partner with Rancho Mesa. He specializes in providing insurance for the construction industry. Today, we're going to discuss mitigating risks for solar installers with professional liability insurance. Kevin, welcome to the show.
Kevin Howard: Good morning. Thank you.
AB: So. Since the onset of the 21st century, the solar installation industry has been in high demand. It's an industry that is ever changing and is constantly adapting to new energy storage, federal and state regulations, and supply chain demands. So risk created for solar installation contractors is growing as these contractors grow their businesses, is general liability insurance enough to cover the risks that they're facing every day?
KH: Honestly, it's not. And I think that's a real common mistake that a solar contractor might make, is that, hey, I have my commercial auto, I have my worker's compensation, and I have general liability. But there are so many marginal risks involved in solar installation, and we'll talk more about that, that really falls into the professional liability category.
AB: Okay. So will you give us a few examples of instances where a professional liability insurance policy would apply for solar installation contractors?
KH: Absolutely. I'm going to name four and we can really wrap our heads around these four, and there's plenty more, but four main components that would be in the professional liability realm as far as risk would be design errors. So, hey, we're talking to a customer. We're going to build out a system for their rooftop that's going to create energy, which then turns into savings. What if our designs are incorrect?
AB: Right.
KH: What if one of those solar panels is in a shaded area and our CAD system was incorrect? What happens then? Keep in mind, a general liability insurance needs to be triggered by bodily injury or property damage. There's no bodily injury in that claim or that lawsuit, and there's no property damage. So.
AB: Yeah, and I could see how that could easily happen where somebody types in the wrong dimensions or, you know, they make a mistake in the calculations. And then the whole estimate of what energy is going to be created is off. And the customer could be pretty upset about that.
KH: They could be upset. And also keep in mind, we talked about how busy and how booming this industry is. We're moving fast and there's a lot of customers. And so the probability of a mistake occurring goes up. So let's protect the company and let's have some sleep insurance that, hey, if if there's an error on our design or somebody is upset, I mean, it's going to happen, do we have the correct protection in place?
AB: Right. So what other examples can you come up with.
KH: Failure to comply with building codes. You know, there's ever changing building codes. I think in California, especially, we're seeing this transition where, hey, we're moving away from gas and there needs to be sprinklers. There's so many changes. So keeping up with that and if there's a claim having to do with those building codes coming back to the installer, you know, a professional liability policy, that could be a really great function to protect the company. The next one would be battery storage. This is pretty new Net Metering 2.0 and Net Metering 3.0 is now here. There's a lot of change in the area of how do we keep our energy that we're generating from our solar panels. That's the function of the battery. We install it. It helps us control how much energy is in the house or in the building, you know, if that's installed incorrectly, and a family, for example, has two or three electric vehicles, this storage is essential for their day, right? You know, a family's not going to go two, three, days a week with this malfunction. They're going to come back to the installer.
AB: Yeah, I could see if maybe they were told that, two batteries is going to be perfect for the amount of electricity that you're using. And then you realize, oh no, we should have gotten three or four.
KH: Well, in this demand's going to increase.
AB: Yeah.
KH: I mean, the there's a goal, right, for 2050 to be we're running on electric cars, everybody. And so this demand is going to grow. And this part of the risk exposure for this industry is going to grow hand in hand with that demand and then maintenance contracts. Let's go deeper down the rabbit hole and let's imagine there's a solar installer who's been hired to create emergency lighting systems in case there's a blackout or a brownout. Think of downtown, the pandemonium that would be going on in a scenario where there's a blackout. People can't get out of parking garages. There's elevators that need to function and chaos, right?
AB: Yeah. Especially if they don't have a backup generator or something.
KH: Right.
AB: And they're relying on a solar panel to to create energy for that.
KH: Right. And if you look into these contracts with the city of San Diego, there's solar contractors or electrical contractors that have installed these systems. They better function, you know, there could be a multitude of lawsuits, claims. Who knows? And I don't believe they'd be tied to any injuries or property damage. Right.
AB: Right.
KH: Hence professional liability. This is the need and the type of defense mechanism needed as far as a risk transfer product.
AB: Yeah. So general liability insurance is not going to cover these types of things for these solar installation contractors at all. They really do need professional liability coverage to make sure that anything that they're installing, anything that maybe they made a mistake is going to be covered because it's just not going to be covered right under the other policy.
KH: It's essential. It'd be like a doctor performing surgeries without malpractice insurance, literally.
AB: Right.
KH: I guess so, for any listeners out there, I mean, it's a it's an amazing industry. I've tried my best to dive really deep into it and to understand how solar companies tick and professional liability is is essential. And there are insurance providers out there right now that are offering general liability, professional liability, pollution liability, all in one package that's tailored to solar contractors.
AB: Okay.
KH: They're a great fit. They have specific coverages tailored to solar contractors. And anybody out there listening, if you know a solar contractor owner or if you're a solar contractor and you're interested, it's a good product. So.
AB: That's great. That's great that there's something that's tailored specifically to this industry. So as the solar industry adapts, the need for appropriate risk protection becomes more and more important. And building an effective insurance program that includes professional liability is critical for all solar contractors, considering the exposures that you mentioned earlier. And with a strong niche in this space, Rancho Mesa brings expertise and market knowledge that can help solar contractors transfer the appropriate risk where necessary. So Kevin, if listeners have questions about strategies to manage their risk, what's the best way to get in touch with you?
KH: Thank you. Yeah, you can email me at khoward@ranchomesa.com. I also have a direct line which is 619-438-6874.
AB: All right. Well, Kevin, thank you so much for joining me in StudioOne.
KH: Thank you so much. Have a great day.
AB: This is Alyssa Burley with Rancho Mesa. Thanks for tuning into our latest episode produced by StudioOne. For more information, visit us at ranchomesa.com, and subscribe to our weekly newsletter.
