What is an umbrella policy for solar panels?

Many Floridians are quickly recognizing the importance of solar home improvements. Duke Energy indicated that they were linking 1000+ new solar-powered households every month at a recent discussion workshop sponsored by the Florida Public Services Commission (FPSC) in September of 2020. Floridians can verify that this evidence is compelling, since rooftop solar is becoming more evident in communities around the state (even being required on new construction in South Miami).

So the main question would be What is an umbrella policy for solar panels?

What is an umbrella policy for solar panels?

A Personal Liability Policy (PLP) is sometimes known as an umbrella policy. In the event that a person is gravely wounded due to the policyholder’s negligence, a PLP provides an additional layer of coverage that goes above and beyond the policyholder’s home and auto insurance liability coverage limitations. A standard house insurance, for example, may give liability coverage up to $300,000 if a person is hurt on the policyholder’s property. If the injured party’s damages exceed the policy’s liability limits, the policyholder will be held accountable for the remaining balance. If the policyholder does not have adequate coverage to cover all of the injured party’s losses, their earnings may be garnished, their retirement funds may be affected, a lien may be issued on their property, or a judgment may be entered against them.

The PLP adds an additional $1 million in liability coverage to the policyholder’s present assets and future earnings.

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PLPs cover the policyholder’s liability when driving, at home, or away from home. As a result, the risk for an insurance company writing an umbrella policy might fluctuate dramatically from one policyholder to the next, even if they are neighbors. The number of drivers and cars in a household, driving and liability claim history, occupation, and other criteria will all influence the cost of a PLP. PLPs, on the other hand, typically cost around $400 per year for a low-risk policyholder.

Are solar panels the future of energy?

Despite the fast expansion of solar in the Sunshine State, some homes have an easier route to energy independence than others. In Florida, utility companies now classify solar systems into categories based on system size, which is measured in Kilowatts (kW). The particular provisions of each utility company’s Interconnection Agreement may differ, but three levels are typically recognized throughout the state:

  • Tier 1: systems with a power output of less than or equal to 10 kW (or 11.7 kW DC)*
  • Tier 2 systems range from 10 kW to 100 kW.
  • Tier 3: equipment with a power output greater than 100kW

While many households may meet their energy needs with a Tier 1 system, systems of 10kW or larger are becoming an increasingly popular alternative for many homes.

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Currently, utility companies in the state of Florida require verification of a specific insurance policy – a Personal Liability Policy (PLP) of at least $1 million – for Tier 2 systems.

The utility company’s reasoning is that it needs to insulate itself from liability if a customer-owned system causes harm or death. Regardless, these regulations are still controversial in many places, including Florida. When asked by FPSC Board Member Max Vogel at the aforementioned utility session in September about what specific concerns this extra insurance is supposed to address, current Duke Energy personnel said, “There is no prospective risk that I can describe for you.”

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Although debates about the justification and necessity of this requirement continue, many Florida residents are presently required to comply – by acquiring the $1 million PLP – or give up their right to select how they get their electricity. The requirement’s description alone – “evidence of general liability insurance in the amount of $1 million” – is intimidating. Despite the increased criteria for Tier 2 systems, many homeowners are still able to experience significant savings on their electricity expenditures due to the inherent affordability of most PLPs.

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Many insurance firms are unaware of this requirement, which might cause difficulty when you ask your insurance agent to “insure my solar panels for $1 million.” When speaking with your insurance agent, make it clear that you require a $1 million Personal Liability Policy (PLP).

In terms of the Interconnection need, you may find it easier to discuss with an insurance representative who is familiar with this policy. Kirk Jones, CPCU, has offered additional information about PLPs. Kirk is the Agency Owner at Enterprise Insurance Advisors in Lake Mary, Florida, and has been an insurance agent for 13 years.

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