About the Risk & Insurance
Solar insurance covers the major financial risks of owning and operating a solar plant: property damage, loss of income from generation downtime, third-party liability, and, in some policies, technology performance risk. In India, all grid-connected solar projects require at minimum an Erection All-Risk (EAR) policy during construction and an Operations All-Risk (OAR) policy for the operational life.
How to calculate it
- 1Construction phase: Erection All-Risk (EAR) policy covering full replacement value of equipment and civil works, third-party liability. Premium: 0.15–0.30% of project cost.
- 2Operational phase: Industrial All-Risk (IAR) or Operations All-Risk (OAR) covering fire, lightning, storm, flood, earthquake. Premium: 0.15–0.25% of plant replacement value/year.
- 3Loss of Profit (LoP) / Business Interruption: covers loss of PPA revenue during insured downtime. Premium: 0.05–0.15% of annual revenue.
- 4Machine Breakdown (MB): covers inverter, transformer, and BMS failures. Often bundled with OAR; separate premium ~0.10%.
- 5Total indicative insurance cost: 0.30–0.50% of plant value/year for a comprehensive policy.
Worked example
A ₹2 Cr (200 kWp) rooftop plant: replacement value ₹2 Cr, annual PPA revenue ₹14 L. OAR premium (0.20%): ₹40,000/year. LoP (0.08%): ₹11,200/year. MB (0.10%): ₹20,000/year. Total insurance cost: ~₹71,200/year = 0.36% of asset value — a standard budget line in the financial model.
What you can calculate
- Risk score
- Insurance ₹
- Fire/tech risk
- Performance bond
Frequently asked questions
Is solar insurance mandatory in India?
Erection All-Risk insurance is typically required by lenders during construction. For operational plants, most PPA agreements (especially with PSUs like SECI, NTPC, or state DISCOMs) mandate all-risk coverage as a condition of the PPA. For owner-financed rooftop systems, insurance is technically optional but strongly recommended — a single inverter fire or hailstorm can cost ₹10–50 L to repair.
Does solar insurance cover hail damage?
Standard all-risk policies cover hail damage under 'storm and tempest.' However, some policies exclude hail above a certain size or require that ALMM-listed modules with an IEC 61215 hail resistance certification are used. Modules with a hail impact certification (11 mm at 23 m/s per IEC 61215 test) are the standard. Ultra-large hail events (golf-ball sized) in Rajasthan/Gujarat have caused significant insured losses in recent years.
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