Rooftop risks – how is the insurance sector tackling the proliferation of solar panels?

As part of the Labour government’s drive to achieve net zero it is encouraging millions of homeowners to fit solar panels to their properties, as well as showing the green light to extra solar farm projects.

However, this is creating a range of risks for property owners and insurers, particularly as solar technology continues to develop at pace.

From product standards, to installation and ongoing testing and maintenance, the insurance industry must remain alert, manage these risks and consider the increased exposures being created.

Adam Holland, head of product at Axa UK, said: “Solar panels, while a valuable renewable energy source, present a number of risks that homeowners and insurers need to consider.

“These include the potential for damage from severe weather and increased fire risk from improper installation, as well as theft or vandalism due to their value. Homeowners are also at risk of being underinsured if they don’t declare the value of their solar panels when selecting their buildings policy.”

Fire is one of the biggest concerns for insurers – faulty wiring, inverter failures and thermal runaway in lithium-ion batteries used in energy storage systems installed alongside solar can lead to serious incidents.

Alistair Bambrook, risk management director at Towergate, explained: “Roof-mounted solar panels also increase structural load, which, if not properly assessed, can lead to roof failure.

”We tend to see this with older buildings where the roof structure may have deteriorated with age or be in a poor state of repair. Weather-related risks such as wind uplift, storm damage, water ingress and snow accumulation further add to the complexity.

“Beyond the above risks, there’s also the issue of the quality of the installation and equipment used. The surge in demand could put pressure on supply chains, increasing the likelihood of substandard components entering the market and leading to higher failure rates. At the same time, a potential shortage of skilled installers raises concerns about improper installations, increasing fire and electrical hazards.

“If solar panels are installed correctly by a certified installer and regularly maintained, solar panels should operate effectively with few issues. Problems can occur if panels are installed incorrectly, using poor quality components, or electrical connections are not secured properly, which may lead to a risk of fire.”

Manufacturing standards

Currently, photovoltaic (PV) panel quality and reliability can vary depending on the manufacture and design standard the solar panels conform to.

To mitigate these risks, insurers are insisting that manufactured panels and installation are certificated to a recognised standard – such as Underwriters Laboratories (UL), Factory Mutual (FM) or German VdS and TUV-SUD – and have the correct safety devices fitted.

Equipment also should be certified under International Electrotechnical Commission (IEC) rules 61215, 61730 or UL 1703, ensuring durability and fire resistance. In the UK, Microgeneration Certification Scheme (MCS) certification is essential for both products and installers, while electrical work must comply with British Standard 7671.

Ilana Gilbert, legal director at law firm DAC Beachcroft, agreed that if there is an increase in take-up of PV panels without appropriate quality control of the product and qualified installers, then the risk of fires will increase.

Fire Protection Association (FPA) data demonstrate that the combination of defects in the product and installation contribute to the majority of PV fires, she added.

There are a number of factors to take into account when managing and mitigating risk from panels.

Gilbert said: “Placement of battery energy storage systems – which contain battery cells – needs to be considered to ensure a suitable fire protection and mitigation strategy.

”Fire risk assessments for the PV panels including the strength and construction of the roof will be key, together with using qualified installers who understand DC connectors and isolators, as well as a maintenance programme will help mitigate the risks.”

Coverage terms 

Installers should consider technical standards in conjunction with the Building Research Establishment (BRE) and the Fire Protection Association (FPA), while separating PV panel arrays and ensuring the proper sealing of cabling.

They should also ensure steps are taken to safeguard firefighters, with the ability to disconnect the system.

Bambrook says: “We suggest conducting thorough risk assessments before installing solar panel systems, ensuring they are correctly installed, taking into account the above risk factors, the installation is undertaken by certified and competent companies and the systems will be maintained in accordance with manufacturers’ guidelines. We also encourage policyholders to have regular maintenance checks to prevent electrical faults.

 “Following installation, we encourage clients to update any relevant risk assessments, especially around fire safety, and provide enhanced fire detection, especially around batteries and control equipment, where needed. It is also important to ensure electrical fixed wiring checks are up to date and ideally precautions such as thermographic testing are completed.

Solar panels are generally covered as standard under buildings policies. Policy terms, conditions and exclusions are regularly reviewed and may be subject to change to manage emerging risks effectively.

Mike Hallam, head of technical services at Biba, explained: “Cover is usually only for material damage and does not protect revenues generated from returning energy to the national grid.

“We understand that this cover is readily available. Storm is covered but, in the event of a claim, insurers would have to verify that a storm within their definition of the peril had occurred and that the panels were correctly installed. Home emergency cover does not usually extend to include solar panels.

“When setting the sum insured to include panels, it is important to take into account the generally increasing cost of replacing a broken panel and keep this under review regularly.”