A solar farm needs insurance that covers equipment repairs, income lost during an insured shutdown, and liability for injury or damage to others. An operating project typically combines property damage, equipment breakdown, business interruption, and third-party liability cover. Before operation, it also needs cover for equipment in transit, construction and testing, and—where required—income losses caused by an insured delay in start-up.
The main gaps to check are hail and flood sublimits, internal equipment faults, off-site grid outages, and a business interruption period shorter than the time needed to replace critical equipment.
All figures below are illustrative calculations in RMB, not market prices or recommended limits. Policy terms and local requirements determine actual coverage.
Coverage by Project Stage
| Stage | Coverage | What the quote should address |
|---|---|---|
| Transport | Cargo | Factory collection, loading, unloading, transfers, temporary storage, and site delivery. |
| Construction | Construction or erection all risks | Site works, stored equipment, installation, energized testing, trial operation, and phased handover. |
| Before commercial operation | Delay in start-up (DSU) | Financial losses when covered physical damage delays the planned commercial operation date. Transit-related delays may need separate arrangements. |
| Operation | Property damage and equipment breakdown | Insured external damage and internal mechanical or electrical faults affecting scheduled equipment. |
| Operation | Business interruption | Covered income losses following insured damage, including equipment breakdown where agreed. |
| Construction and operation | Third-party liability | Legal liability for injury and damage to neighboring property, with legal costs and pollution exclusions clearly stated. |
These covers may sit in one package or several policies. Workers’ compensation, employers’ liability, and vehicle insurance require a separate check against local law and contract terms.
Property Values and Deductibles
Replacement Costs
The asset schedule should include modules, mounting structures, inverters, transformers, cables, and the substations or export lines for which the project bears risk. For Tongwei PV modules, record the supplied model, wattage, and quantity rather than the product-family name alone.
Suppose replacement equipment costs RMB 42 million, while transport, installation, testing, and debris removal add RMB 8 million. The recovery budget is RMB 50 million. Ask the insurer which costs belong in the property value and which need an extension or separate limit.
Underinsurance can reduce a partial-loss payment even when the loss is below the sum insured. The California Department of Insurance explains this risk in its commercial property guidance.[1]
For example, assume a policy requires insurance for the full property value and applies proportional settlement. If that value is RMB 50 million but the declared value is RMB 40 million, a covered RMB 5 million loss would produce this calculation before deductibles and other adjustments:
RMB 5 million × (40 ÷ 50) = RMB 4 million.
Catastrophe Sublimits
A RMB 50 million property policy may carry only RMB 5 million of hail cover. If covered hail damage reaches RMB 12 million, at least RMB 7 million exceeds that sublimit. If property damage and business interruption share the hail limit, their combined payment is also capped at RMB 5 million.
Check whether each catastrophe limit applies per event, per site, or across the annual policy period. Flood, windstorm, and earthquake may have different terms.
Percentage Deductibles
For a RMB 5 million loss at a site insured for RMB 50 million, the basis of a 2% deductible changes the result substantially:
| Deductible basis | Amount |
|---|---|
| 2% of the loss | RMB 100,000 |
| 2% of the insured site value | RMB 1 million |
Confirm minimum and maximum deductibles, how they interact with limits, and whether one storm affecting several sites creates several deductions.
Equipment Breakdown and Lost Income
A transformer’s internal electrical fault may fall outside ordinary property cover. Confirm that equipment breakdown covers the relevant fault and that business interruption responds to the same event. Normal wear, gradual deterioration, and the cost of correcting a defect may be treated differently from sudden damage caused by that defect.
Property-linked business interruption generally follows a covered property loss; it does not cover every fall in revenue.[2] Cloudy weather, lower electricity prices, normal degradation, customer nonpayment, and curtailment without insured damage generally need other arrangements.
Time Deductions
Suppose a covered shutdown lasts 30 days, the daily loss calculated under the policy is RMB 10,000, and the wording expressly excludes the first 72 hours. Before other adjustments:
(30 − 3) × RMB 10,000 = RMB 270,000.
Some waiting-period clauses work differently. Read the calculation rule, not just the number of hours. Actual losses may also need adjustments for seasonal output, electricity prices, saved expenses, and generation from unaffected equipment.
Recovery Time
Include procurement, shipping, installation, testing, and grid reconnection when estimating recovery. If the covered recovery period lasts nine months but the maximum indemnity period is six months, the remaining three months may be uninsured.
A policy’s expiry date does not necessarily end an existing claim. An insured incident before expiry may have a business interruption period that continues afterward, subject to the wording.
Construction and Handover
If the purchase contract makes the buyer responsible for damage from factory collection, cargo cover should begin there. Cargo insurance does not automatically pay for lost income when damaged equipment delays the start date; check transit-related DSU separately.
A plant commissioned in three phases, 30 days apart, needs a clear insurance handover for each phase. Acceptance, use, or completed testing may end construction cover for that equipment before the overall project completion date.
DSU generally requires insured physical damage to delay commercial operation. Permit delays, funding problems, and ordinary late deliveries do not qualify merely because they postpone revenue.
Project-Specific Gaps
- Hail: Confirm how module microcracks and power loss will be assessed, and whether testing costs are covered.
- Flood: Check the treatment of surface runoff, standing water, and other relevant causes of water entry.
- Off-site grid failure: Identify the substations and lines covered by any interruption extension, its damage trigger, and its limit.
- Battery storage: Declare capacity, replacement value, battery type, layout, and fire protection. Check damage to nearby PV equipment and downtime following thermal runaway.
- Cyber incidents: Confirm whether a control-system outage without physical damage has any business interruption cover.
- Pollution: Check cleanup costs and third-party liability for transformer oil leaks and contaminated firefighting water.
Module Warranties
A 25- or 30-year power warranty does not guarantee annual plant revenue and does not generally cover hail, flood, and fire damage. Check the degradation schedule, test procedure, exclusions, and remedy: repair, replacement, or compensation under a formula.
For Tongwei equipment, obtain the module warranty documents applicable to the model, market, and purchase date. Check removal, shipping, reinstallation, and lost revenue separately.
If a supplier states that warranty insurance applies, request confirmation covering the purchased batches or serial numbers, the beneficiary, coverage dates, and claim route. A product authenticity check does not establish insurance registration.
Comparing Quotes
Give each insurer the same site coordinates, asset values, equipment list, hazard information, revenue records, and claims history. Include the exact module specifications for the equipment being insured.
The U.S. Small Business Administration advises comparing policy terms and benefits alongside price.[3] Ask insurers to price one change at a time—for example, extending interruption cover from six to 12 months or increasing the hail limit from RMB 5 million to RMB 15 million.
Compare the quote with financing, lease, and EPC requirements. Resolve differences in insured parties, claim-payment arrangements, cancellation notices, and handover dates before binding cover.
Claim Records
Report an incident promptly and take safe steps to limit further damage. Commercial policies impose reporting duties, and timely notice allows the insurer to investigate the loss.[4]
Keep photographs, serial numbers, fault logs, inspection reports, repair quotes, and replacement lead times. Tongwei’s module authenticity query accepts product barcodes; retain invoices and delivery records alongside any verification result.
Business interruption claims also need shutdown and restart times, generation and irradiance data, electricity prices, and settlement records. Unless urgent work is necessary, agree on inspection arrangements before dismantling or disposing of damaged equipment.
The cited government guidance explains general insurance principles, not universal solar policy terms. A qualified insurance professional should review the project’s contracts and proposed coverage.