California PV Installers - General Liability Insurance [RE-wrenches]

[Matt Lafferty]

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All,

Barbara K wants to know about GL insurance for PV contractors in CA....  

Barbara,

Get your checkbook out!  GL in CA is gonna drain it faster than a Hummvee
drains a gas tank at 100 mph...

Your experience is not unique.  More the status quo in the past 2-3 years.
The past year's cycle of renewals (also replacements for some since their
carriers "don't cover that anymore")  The parts you forgot to mention are
the number of companies who WON'T even quote you; the long waits for quotes;
and the intense detail requirements of the application forms.  (There are
standard forms for the insurance industry, but it seems like every company
uses a different one... *#^#)(((#&!!!  As soon as you say "Solar or PV" on
your form, the underwriters require additional detail...)

This issue is not specific to Solar.  It is one of the largest issues facing
the construction industry statewide.  I'm sure other "lawyer-heavy" states
are experiencing similar conditions, probably not on the scale of CA....
Yet!

Not all insurance is the same!  Make sure you truly understand what it is
you need for your company, define it in your application, and make damned
sure it's included in the quote / policy you get!!!!  We've had to become
de-facto lawyers for this reason... You don't want a policy that doesn't
cover the one thing you truly need coverage for!  They have a way of
including little exclusions just for you!  Understand that insurance
companies are about "managing their risk", not about "protecting your
interests".... Don't ever forget that!

There are several key things that we have found which affect your ability to
get the best quote for the right coverage... 

1)  Develop a relationship with a knowledgeable, experienced, and
cooperative Commercial Broker who represents multiple lines.  The commercial
insurance market is more complex here than ever.  You don't want to dork
around with a youngster right now, no matter how eager and "competent" they
are.  Demand that your Broker work with you personally and not assign your
business to an assistant!  You will spend far less time, lose far less hair,
and extend you life with this one.  If your current broker relationship
doesn't match the above description, leave.  Go straight to the local coffee
shop at 7:30 AM (where local business persons hang out, not Starbucks) and
grab a seat right in the middle of them.  Repeat this for 3-5 days in a row.
You will find the Broker you are looking for, right there.  No BS.  This
person will be genuinely liked by the other people around the table.  Watch
how others interact with this person.  (It will most likely be a "him",
grandfatherly, wrinkled jacket if wearing one... Hey, that sounds like Pat
Redgate!) 
2)  Know your business.  Every aspect.  Financial, market segments covered,
historical and projected market segment gross & % of your revenues, etc.  
3)  Know your insurance needs for the next 1, 2, & 3 years.  
4)  Take your time completing the applications.  Include supplemental
documentation, letters of explanation & work samples, etc.... Questions on
the applications are outdated and intended for bean counters to be able to
assess the risk associated with insuring you.  Often, they don't seem to
apply to "us".  Get on the phone with your Broker and find out exactly what
it is that "they are looking for"... Remember, the "PV Box" hasn't been
clearly defined by the underwriting industry yet.... We sort of cross a
bunch of traditional "trade lines"...    
5)  If you don't have a PE on staff, do NOT say you "design" or
"design-build" anything!!!!!!!  All you do is install products manufactured
by others.   If this applies to you and you don't follow my advice, refer to
#6 below.  For those of us Non-PE's who consider ourselves to be PV System
Designers... We're NOT.  I'll leave out all the reasons for this, just trust
me...
6)  If you mention "New Construction" of any kind, take all the money you
planned on spending on insurance this year, close the doors, go straight to
the airport, pick a nice tropical destination where you can live out your
life in an anonymous Jimmy Buffet lifestyle, and stay there!  Make sure it's
not too close to mine...
7)  If you mention "Multi-Family" of any kind, see # 6, above.
8)  If you mention that you "manufacture" or "fabricate"...

There are strategic workarounds for all these issues.  Depending on the
form, size, CCL Classification(s), market segments covered, etc. for each of
our businesses.... The "right" coverage may be multiple policies &/or
"riders"... Don't leave out the possibility of "project-specific" coverage
for that "only one of its kind that we're gonna do this year" project.
DON'T BUY A POLICY COVERING ONE OF THE STICKY ISSUES UNLESS YOU ACTUALLY
HAVE SIGNED CONTRACTS FOR THE WORK!  "I think I'm gonna..." will cost you
BIG $$$.

If you are a relatively medium-to-large sized organization with a sizeable
"design-staff" but no PE, you might want to consider getting one.
Re-organize your Corporation so the "Design" side is "separate" from the
sales and construction side.  Get E&O for the Design side.  This opens up
other potential high-margin revenue streams for your company and minimizes
your exposures.  If you use outside PE services, make sure you get become a
certificate-holder on their E&O, no matter what you do.

If you really have to do Residential New Construction, especially in the
production home or Multi-Family markets, I would look for a GL policy with
potential for "project-specific" riders and negotiate with the customer for
a direct pass-thru of some or all of the cost.  If your "customer" happens
to be one of the Glass Manufacturers, then insist on them paying the whole
thing or you won't do the job.  Be a hard-ass on this point.  

Module manufacturers have been short-sighted and ignorant and unwilling to
listen to the very real costs and issues of the Resi New Construction
market, especially in CA.  Screw 'em.  If they really want to play in this
market, they'd better wake the heck up!  It ain't a joke!  It costs big $ to
play in this game.  They think their products are ready for the "standard
production home subs", but they aren't.  They think they want to go
"Developer Direct" and forget about the real Solar Installation Industry...
They will fall on their faces in CA.  Fall or be sued.... CA doesn't just
stand for "California", by the way.... It also stands for "CLASS ACTION"....
Ask any Developer, Builder, Insurance Broker, or Attorney....  

If I remember correctly, Kerr Enterprises is a C10... Y/N?  Do you carry any
other CCL classifications?  

If you're only carrying a C10, for instance, and you "work on roofs", an
underwriter has a hard time rating you... Roofer or Electrician?  Same thing
with ground-mounts... Civil / Concrete / Foundation or Electrician?  This
process is only minimally related to your CCL classification(s), but they do
look at it for reference.  The "roofer" relationship is a big $ item, even
in the Retrofit market... See definition of CA above....

"Licenses" and "professionals" on the applications don't mean what we think
they mean, by the way... Just because you're the "CEO" doesn't mean you're a
"professional" from an insurance point of view... They are talking about
"Registered" professionals.... Engineers, architects, doctors, lawyers,
nurses, etc.  NABCEP doesn't mean squat to an underwriter, by the way...
Yet.  Maybe someday!

Good Luck to All!

Pray for Sun!

Matt Lafferty

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