Why do I need equipment breakdown coverage for my solar PV system?

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Why do I need equipment breakdown coverage for my solar PV system?


Installed capacity continues to climb

The installed capacity of solar powered electricity generation continues to climb year-on-year, driven by government incentives and falling cell prices.


What are solar photovoltaic (PV) panels?

Solar photovoltaic (or PV) panels are made up of many cells which convert sunlight into electrical direct current, or DC. If this power then feeds into the electrical grid, it must be converted into alternating current, or AC.


Solar PV systems utilize many electrical components such as:

  • Mounted panels
  • Inverters
  • Breakers
  • Meters
  • Cables and wires


Electrical breakdown can occur through:

  • Improper testing
  • Bad installation, or
  • Improper wiring

Voltage sags or surges can disturb inverters and breakers.

Arcing can be caused by the shading or blocking of any small module for an extended time, such as an entire day.


Mechanical tracking systems

Some systems use mechanical tracking systems employing sensors, gearboxes and motors, to help maximize direct sun exposure during daylight hours. Such components are also subject to breakdown.


Mechanical breakdown can happen to:

  • Cells, through corrosion and peeling, caused by heat and humidity;
  • Wiring, gnawed by animals such as squirrels searching for nesting materials, and
  • Gearboxes and motors, through metal fatigue, poor maintenance and operational human error

Property policies typically exclude such losses

Property policies will typically exclude loss or damage caused by electrical and mechanical breakdown. Only equipment breakdown insurance covers such losses.


Do manufacturers’ warranties cover equipment breakdown?

While manufacturers’ warranties are included in the purchase price, they only cover manufacturer defects and design; are limited to a specific product or part; for a short period of time. Not all replacement parts or labour are covered, and, business interruption losses are not included.


Business interruption is a key exposure

For revenue generating systems, business interruption is a key exposure, and can outweigh direct damage.

In this loss example, an electrical deficiency damaged a transformer. A replacement required over three months to obtain. During downtime the insured experienced a $203,000 business interruption loss, whereas direct damage was $38,000.


Protect your investment.

Equipment breakdown insurance covers gaps found in most property policies.

As technology and risk become more sophisticated, you can rely on The Boiler Inspection and Insurance Company of Canada to provide industry-leading products and services for your equipment exposures.


Are you a broker? Self-rate, bind and issue commercial equipment breakdown policies in less than 5 minutes.

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