[RE-wrenches] Insurance for solar design and inspections
Ray Walters
ray at solarray.com
Mon Mar 11 22:25:50 PDT 2024
Something else to consider for us small operators: LLC and
incorporation offer some protection as well. If your company is sued,
and then declares bankruptcy, there's not going to be much for the other
party's attorneys to go after. I've heard it described by my attorney,
that most attorneys won't even take the case when they hear the
defendant is uninsured. When you are insured, they will sue for exactly
what the insurance covers + your liquid assets. They don't want your
old truck and tools.
Everything we do, (especially driving) has risk. We have to decide on a
job per job basis whether that risk is acceptable for the amount of
money we're charging. Bigger, more complicated jobs = more risk,
therefore more insurance is probably warranted. Some projects require
so much insurance that you can't even do the job. I worked on some
pipeline projects that increased the required insurance to $20 million
at a cost of almost $100k/ year. We don't do that work anymore.
This is also why I don't have a bunch of kids running around in trucks
making mistakes every day; too much liability. I closely supervise
everything that my company takes responsibility for, and I sleep well at
night with my standard contractor's liability insurance.
Remember, insurance agents primary goal is to sell more insurance. Of
course they want you to have an E&O policy, too.
Ray Walters
Remote Solar
On 3/11/2024 7:41 PM, Howie Michaelson via RE-wrenches wrote:
> William, et al,
> As always, a thorough explanation of your considered opinion. Thanks.
> Food for thought and a question to others who have more insight to the
> world of insurance and liability than I:
> My understanding of General Liability insurance, is that it is
> intended to cover mistakes in the physical work process - that is
> things like frying a piece of electronics due to faulty installation
> practices, dropping a hammer onto the pet cat, leaving an exposed
> conductor that one of the toddlers in the house stumbles upon and
> decides to see how it tastes, hanging the inverter on a sheetrock wall
> using toggle anchors, or one of a million mistakes possible during or
> after the installation. On the other hand, if I design an 10kW
> inverter to backfeed through an outlet (or more likely a conductor
> that inadvertently undersized for the distance it is running), or I
> design something that is compliant with the 2020 code cycle, but
> unbeknownst to me the jurisdiction I am working in adopted 2023 last
> week, and the design later is found at fault in a fire that burned the
> house down, General Liability does not cover me. That is when an E&O
> policy would come into play and cover my ass. THis is what a previous
> insurance agent informed me of after being insured through them for 15
> years without an E&O policy (thank you very much). If this is true,
> then it doesn't seem like it matters whether you or someone else does
> the work, if it is your design that is being used. Without an E&O
> policy, you potentially own any design errors for the life of the
> system. I wasn't sure if you were saying that you are comfortable
> taking on that liability because you have enough faith in your design
> work, or if your impression is that if you do the installation work, a
> general liability policy will cover any problems. I would understand
> the former (although I don't think I would be willing to accept that
> liability unless perhaps the cost of the policy was prohibitively
> expensive). If my understanding of these policies is not accurate,
> then I would love to hear a correct interpretation of what they do and
> don't cover.
>
> Howie Michaelson
> Sun Catcher
>
>
> On Mon, Mar 11, 2024 at 8:02 PM William Miller via RE-wrenches
> <re-wrenches at lists.re-wrenches.org> wrote:
>
> Dave:
>
> I have thought about this dilemma pretty carefully in the past. I
> have come up with a line of logic that works for me. I will try
> to keep the explanation short but there is some nuance to it that
> might take some ‘splaning.
>
> As a licensed electrical contractor it is my responsibility to
> design the systems I install, with certain exceptions. I don’t
> know if this is the correct term, but I call it design/build. My
> exposure is covered and my requirements are met if I have a
> general liability policy and the required bonding any contractor
> would. Coverage for errors and omissions is not required.
>
> If the scope of the project is complicated beyond some level then
> the services of a PE will be required and a wet-stamped plan may
> be needed, or at least sensible to provide. The client or the
> building department may require this added service.
>
> The level of complexity at which external, licensed design
> services are needed is subjective. Most electricians don’t need a
> PE to draw up a new or replacement service or the details of
> configuring branch circuits, to name a few examples. The
> requirements can be deduced from the particulars of the project
> and the language of the NEC. If the contractor is inexperienced,
> then more design help is needed. If the contractor is more
> experienced, then more complex projects can be designed in-house.
> I decide for myself if I am qualified to do the design work, or not.
>
> Before a bid is prepared some level of design needs to be
> accomplished in order to define the scope of the project, specify
> the materials and predict the labor required. My preference is to
> design the heck out of any job so I don’t get any unpleasant,
> expensive surprises once the project commences. I don’t do this
> level of design work for free. There is always a work order for
> design time.
>
> However I do not always get the contract to perform the physical
> work. The bid price may be too high or the project may not go
> forward for any number of reasons.
>
> Unless there is some proprietary information in the design, once
> the customer pays my design fee the customer owns that design and
> is entitled to deliverables in the form of drawings, calculations,
> bill of materials, etc. If I hand over those documents but do not
> install the work, I am essentially working design only, not
> design/build. However because the intent was to design a project
> I would build, I don’t worry about that detail. I assume no
> liability for any part of the project unless I am hired to build
> it. I have no control over what the client does with the design
> information once I turn it over.
>
> Under this logic I am pretty comfortable providing occasional
> design-only services as long as I could demonstrate, if asked,
> that I was operating in good faith on a design/build project.
> This intent can be satisfied by the language of the work order,
> specifying the client will provide an opportunity for you to bid
> on the work in hopes of winning the contract.
>
> This approach might work for you or at least give you something to
> think about. Not everyone is willing to take the same risks.
> Sorry about all of the words. I could not explain this approach
> any more concisely.
>
> William
>
> Miller Solar
>
> 17395 Oak Road, Atascadero, CA 93422
>
> 805-438-5600
>
> www.millersolar.com <http://www.millersolar.com/>
>
> CA Lic. 773985
>
> *From:*RE-wrenches
> [mailto:re-wrenches-bounces at lists.re-wrenches.org] *On Behalf Of
> *Dave Tedeyan via RE-wrenches
> *Sent:* Sunday, March 10, 2024 3:23 PM
> *To:* RE-wrenches
> *Cc:* Dave Tedeyan
> *Subject:* [RE-wrenches] Insurance for solar design and inspections
>
> Hi All,
>
> I have an insurance question and am very curious about how others
> deal with this, or don't. People will sometimes ask us to either
> do some design work for a system that we will not be installing,
> or to inspect a system and give my professional opinion about it.
> These are two separate work situations.
>
> Recently, our insurance agent brought it to our attention that we
> should have insurance specifically for these kinds of work, and it
> is not something that is covered under our general liability
> (contractors) insurance.
>
> Their recommendation for design work is to get "professional
> liability" (errors and omissions) insurance. Even though I may do
> one or two designs a year, we are looking at a roughly $12,000
> policy. This would be meant to cover us if I make a mistake in the
> design that leads to some sort of failure or fire.
>
> Their recommendation for the inspection type work is to get
> essentially a home inspector insurance policy for about $2400 per
> year. Again, this is something that we do a handful of times per
> year. This insurance is meant to cover us if I inspect a system
> and miss something that then ends up being a problem or a hazard.
>
> With a brief conversation with a lawyer acquaintance, he thought
> that I may be fine with out these insurances. It sounded like I
> should have something in my service contracts that would
> essentially say something like "we will do this work to the best
> of our ability", and then if something does go wrong and the
> homeowner takes us to court, it is upon them to prove that we
> missed something that a reasonable person would have caught. My
> business manager does not like this because we could still have
> lots of lawyer fees and have to show up in court if we were to get
> sued, even if the problem was not caused by a lack of diligence on
> our part.
>
> So my question to all of you is, do you have these insurances? Or
> do you just not do designs and inspections unless you are actually
> turning some wrenches on the site so that your general liability
> insurance covers your work? Or, is this a case of our insurance
> agent putting ungrounded fears in our head?
>
> Thanks for your thoughts.
>
> Cheers,
>
> Dave
>
> --
>
> Logo <https://www.sungineersolar.com/>
>
>
>
> *Dave Tedeyan, P.E.
> Owner | Sungineer Solar*
>
> *p: *he | him | his*
> a: *1653 Slaterville Rd.| Ithaca, NY 14850
> *w:* www.sungineersolar.com <http://www.sungineersolar.com/>
> *c:* (607) 270-0370
>
>
>
>
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