How Much Does Solar Energy Project Insurance Premium Cost in Indonesia?

Solar energy projects (rooftop, ground-mounted, or floating) have a unique risk profile: exposure to extreme weather, panel theft, damage during transit and installation, and operational disruptions that reduce electricity production. Insurance premium costs are heavily influenced by project stage, scale (MWp), technology (string vs. central inverter, fixed-tilt vs. tracker), location (prone to flooding/wind/corrosion), and contractor and supplier quality. This article maps insurance types and estimated premium ranges at each phase, plus the role of brokers like L&G in negotiating the best rates and assisting with claims.

Note: The premium ranges below are indicative for the Indonesian market and are highly dependent on the underwriter’s risk assessment, claims track record, design quality, equipment specifications, and mitigation strategies.

Contact L&G Insurance Broker now at 08118507773 for a free consultation before the risks haunt your business.

Design Phase (Engineering)

Main Risks

1. Design/engineering errors that cause underperformance, hot spots on modules, string mismatch, or even structural failure (e.g. mounting/rail, ballast, pile foundation).
2. Non-compliance with grid standards, lightning protection, and protection coordination (AC/DC).
3. Weak technical documentation triggers variations in work and additional costs (variation orders).

Relevant Insurance Types

1. Professional Indemnity (PI) / Errors & Omissions (E&O)

Protecting consultants/engineers from third party claims due to errors/designs that result in financial losses.

1. Cyber ​​Liability (optional, but increasingly relevant)

For utility-scale projects with SCADA/monitoring and network integration, a cyber incident could trigger a shutdown/output reduction.

How Much Does the Premium Cost?

PI/E&O: generally 0.20% – 0.60% of the annual limit (e.g., IDR 50 billion limit for projects larger than 20 MWp), depending on risk profile, team experience, and claims record.

Cyber: highly variable, often income/limit based, indicative 0.10% – 0.35% of policy limit.

How to Reduce Premiums

Certification & design methodologies (IEC/UL/ASTM), design peer review, conservative structural calculations, and rigorous change management.

Brokers like L&G prepare compelling engineering submissions (engineer curriculum, flow diagrams, protection specifications, concise FMEA) to lower underwriters’ risk perception.

Procurement Stage

Main Risks

1. Delay in supply of module/inverter/transformer / SCADA.
2. Damage during transit (sea, land, air): module breakage/cracking, humidity, salt corrosion (for nearshore projects).
3. Supplier fraud (rare, but should be anticipated with due diligence).

Relevant Insurance Types

1. Marine Cargo (termasuk warehouse-to-warehouse)

Protecting equipment from the time it leaves the factory to the project site.

Warranty options: ICC (A) (widest), ICC (B), ICC (C). For high-value modules/inverters, ICC (A) is most recommended.

1. Transit/Project Cargo Inland

For domestic movement from port to site (truck/train/barge).

How Much Does the Premium Cost?

1. Marine Cargo – ICC (A): indication of 0.12% – 0.25% of the value of the goods (CIF/CIP).
2. Inland Transit: 0.05% – 0.15% depending on route/terrain (mountains, flooded areas), security, and packaging.

How to Reduce Premiums

Packaging & labeling according to standards, route survey, vendor with packed QA, shock & tilt indicator, and clear Incoterms contract.

L&G submitted a risk improvement plan (unloading protocols, pre-loading photos, pre-shipment inspections, nighttime transport SOPs, escorts) so that rates could be more competitive.

Construction & Installation Phase (Erection/Testing & Commissioning)

(This stage often determines the total project premium amount)

Main Risks

1. Damage during installation (dropping, cracked module, short DC).
2. Extreme weather (strong winds, heavy rain, floods, lightning) during construction.
3. Work accidents (falling from a height, injuries during welding).
4. Testing & energization (commissioning) triggers inverter/transformer damage.
5. Third party interference (theft, vandalism).

Relevant Insurance Types

• EAR (Erection All Risks) / CAR (Construction All Risks)

Covers unforeseen physical damage to the work during construction and installation, including testing/commissioning as per the clause.

• Third Party Liability (TPL)

Third party losses (injuries/objects) during work in progress.

Delay in Start-Up (DSU) / Advance Loss of Profit (ALoP) – optional but important

Compensate for financial losses (lost revenue) due to COD delays due to damage guaranteed by EAR/CAR.

• Workmen’s Compensation / Personal Accident (project workers).

How Much Does the Premium Cost?

1. EAR/CAR: indication of 0.12% – 0.35% of Total Project Value (material + work), adjusted for location & duration.
2. TPL: often flat based on limits (e.g. Rp25–100 billion); indicative of 0.05% – 0.15% of the project’s annual limit.
3. DSU/ALoP: rate on revenue exposed, indicative of 0.20% – 0.60% of the potential loss value during the indemnity period (e.g. 6–12 months).
4. PA/JK: refers to wages/labor, indicated Rp x per worker per year—varies according to policy.

How to Reduce Premiums

Method installation neat (torque wrench log, string layout & IV-curve test), quality plan EPC, lightning protection, kontrol hot work, and housekeeping.

Realistic project duration (underwriter penalties for “tight” schedules that are prone to overtime & accidents).

L&G typically presents a Construction Risk Assessment (layout, wind design, foundations, flood mitigation plans, temporary works) for a more relaxed discount rate and sub-limits (e.g. extended testing).

Operation & Maintenance (O&M) Phase

Main Risks

1. Extreme weather (wind, hail—depending on the area), lightning, floods, landslides.
2. Theft/vandalism of modules, copper cables, combiner boxes.
3. Equipment failure (inverter, transformer, recloser, tracker motor).
4. Performance degradation (soiling, module delamination, PID).
5. Grid fault & reverse power.

Relevant Insurance Types

1. Property All Risks (PAR)/Industrial All Risks (IAR)

Covers physical damage to equipment & physical assets during operations.

1. Machinery Breakdown (MB)

Mechanical/electrical failure of critical equipment (inverters, transformers, switchgear).

1. Business Interruption (BI) / Loss of Revenue

Covers loss of income due to damage covered by PAR/MB during the recovery period.

1. Equipment/Stock Floater for expensive spare parts.
2. General/Public Liability for third party claims during operations.
3. Environmental Liability (optional, specifically for sensitive areas/floating solar power plants).
4. Crime/Theft Extension (cable/panel theft) – often a concern for underwriters.

How Much Does the Premium Cost?

1. PAR/IAR: indication of 0.05% – 0.30% of Total Insured Value (TIV) per year.
2. MB: 0.03% – 0.08% of critical machine value.
3. BI/Loss of Revenue: based on gross profit/expected revenue; indicates 0.12% – 0.40% of the potential loss value during the Indemnity Period (e.g. 6–12 months).
4. GL/PL: 0.05% – 0.15% of the limit.
5. Theft extension can increase the rate by +0.02% – 0.06% depending on history and security.

How to Reduce Premiums

1. SCADA & monitoring real-time, string-level alerting, preventive maintenance (thermography, insulation resistance test, earth resistance test).
2. Security: multi-layered fencing, CCTV, perimeter intrusion detection, anti-theft fasteners, patrols.
3. Catatan performa (PR, availability >99%), spare parts strategy, SLA OEM.

L&G helps benchmark O&M KPIs and develop loss prevention plans that are preferred by underwriters so that deductibles and rates can be better.

Financial Aspects: Tender & Performance Guarantee (Surety)

When is it needed?

EPC solar power projects (private or PLN/IPP) usually require tender guarantees and implementation guarantees as part of the contract to ensure the contractor’s commitment.

Types of Guarantees

1. Bid Bond (Tender Guarantee)

Guarantee that the tender winner will not withdraw and will sign the contract.

1. Performance Bond

Ensure contractors complete projects according to specifications & schedule.

1. Advance Payment Bond (if there is a down payment).
2. Maintenance/Warranty Bond (maintenance time).

How much is the premium (surety)?

1. Bid Bond: relatively small & short fee (tender duration), indication 0.1% – 0.3% of the collateral value (fee).
2. Performance Bond: 0.5% – 1.5% per year of the collateral value (depending on the contractor’s financial rating, collateral, track record).
3. Advance / Maintenance Bond: looks like performance, arrange case-by-case.

Besides through a surety company, tender and performance guarantees (surety bonds) can also be issued in the form of a counter-bank guarantee. The contractor provides a bank guarantee to an insurance company, which then issues a surety bond to the project owner. Costs are generally slightly higher due to the bank’s involvement, ranging from 1.0% to 2.0% per year of the guarantee value, depending on the contractor’s financial condition and collateral.

The Role of Brokers

L&G assesses the contractor’s financial capabilities, compiles a surety credit profile, and matches them with a surety company with the right appetite, resulting in more efficient fees with realistic terms (collateral/indemnity).

Premium Simulation: 50 MWp Solar Power Plant Project (Illustrative)

Summary assumptions: 50 MWp ground-mounted project in Java, EPC value Rp 700 billion, operating TIV Rp 600 billion, annual revenue Rp 120 billion; construction duration 12 months; lowland location, moderate flood risk, moderate winds.

Important: The figures above are not offers, but merely illustrations to help decision-makers understand the premium order and the coverage-cost trade-off. With risk improvement and broker negotiation, the total premium can be more efficient.

Strategies to Reduce Premiums Without Sacrificing Protection

• Superior Design & Specifications

Module certification (IEC 61215/61730), inverter grid-code compliance, rated lightning & surge protection (SPD, earthing < 5Ω).

• Site Selection & Civil

Flood & wind analysis (return period), drainage, inverter skid elevation, corrosion (C3–C5M), and safe cable management.

• Kiner EPC & QA/QC

EPC experienced, method statement, ITP, FAT/SAT, string testing.

• Physical & Operational Security

Perimeter fence, CCTV, patrol, anti-theft fastener, critical spare parts, OEM SLA, and spare inverter module.

• Transparent Performance Data

Data room for underwriters: PR, availability, independent inspection reports—increase confidence and reduce rates/deductibles.

• Insurance Program Structure

Consider higher deductibles to lower premiums; use co-insurance/layering for large limits; multi-year rate agreements post COD.

The Critical Role of Insurance Brokers like L&G

1. a) Program Design & Limit Determination

L&G maps the risk register across phases (engineering → procurement → construction → O&M) and then creates a comprehensive insurance program: what is covered by the EAR, what is transferred to Marine Cargo/Transit, how DSU/ALoP is calculated, and reasonable limits & sublimits (windstorm, flood, theft, testing, transit within site).

1. b) Negotiate Rates & Terms

With access to many local & international insurers, L&G compares terms (rate, deductible, warranty, exclusion, special conditions), using loss prevention plans to achieve discounts and softened exclusions (e.g. theft, hail, storm surge extensions for floating PV).

1. c) Document Management & Contract Compliance

Align the policy with the EPC/PPA/Financing Agreement (e.g., named insured, loss payee, waiver of subrogation, non-vitiation clause, lenders’ clauses). This is crucial to maintaining bankability.

1. d) Pendampingan Klaim (Claims Advocacy)

When an incident occurs, L&G:

1. Fast notification to insurers & loss adjusters,
2. Evidence security (photos, string loggers, SCADA logs),
3. Coordination of investigations and root cause analysis,
4. Policy interpretation advocacy (encouraging the reading of clauses that benefit the insured),
5. Accelerate payments (interim payments, on-account for project cash).

1. e) Education & Operational Discipline

Toolbox & training sessions: hot works, lifting, electrical isolation, lockout-tagout, and maintenance calendars to reduce risks and make premium renewals more competitive.

Example Claim Scenarios & How to Resolve Them

Scenario A – Damage During Testing

• During commissioning, a voltage surge occurred that damaged some inverters.
• Policy: EAR (Testing & Commissioning section).
• Steps: Notification < 48 hours; collect test logs, event recorders, damage photos; adjuster site visit; cost estimate; deductible determination.
• L&G’s role: Confirm that the incident occurred during the EAR warranty period, not a pre-existing defect, so that the claim is paid.

Scenario B – Cable Theft in O&M

• AC/MC4 cables were stolen during the night causing a partial shutdown of the string.
• Policy: PAR with theft extension + BI (if significant income loss).
• Steps: Police report, CCTV footage, missing materials list, downtime estimate.
• L&G Role: Assisting the evidence chain, negotiating interim payments for quick reimbursement & minimal downtime.

Scenario C – Local Flooding

• Extreme rainfall submerged the skid inverter.
• Policy: EAR (if still under construction) or PAR/MB + BI (if under operation).
• L&G’s Role: Push for root cause focus on extreme weather (guaranteed peril), not design defects; set mitigation plans (relocation, elevation)foundation) so that the renewal rate does not increase.

Document Checklist to Speed ​​Up Underwriting & Claims

Design stage: single line diagram, module/inverter specifications, protection coordination, certification, geotech.

Pengadaan: packing list, Incoterms, pre-shipment inspection, route survey.

Construction: EPC contract, schedule, method statement, ITP, safety plan, lightning & earthing.

O&M: SOP preventive maintenance, KPI PR/availability, incident register, SLA OEM.

Claims: chronology, photos/videos, SCADA/relay logs, police report (if theft), cost & downtime estimates.

Finding the Balance between Cost & Protection

The cost of solar project insurance premiums is not a single unit; it varies depending on the project phase, the quality of risk management, and the track records of the parties. Roughly speaking, for utility-scale projects, the total premium throughout the lifecycle (procurement + EAR/CAR + DSU + O&M/BI + liability + surety) often equates to a few tenths of a percent of the project value per year—but with design-for-insurability, that figure can be reduced without sacrificing bankability or safety.

This is where the added value of a broker like L&G Insurance Broker: putting together a comprehensive program, negotiating rates, securing pro-project wording, and winning claims when unforeseen incidents occur. The result: more bankable projects, more secure cash flow, and more secure production targets.

Protect Your Solar Energy Investment Properly!

Don’t risk damaging a multi-billion-dollar project simply by choosing the wrong policy or overpricing premiums. With the support of an experienced insurance broker like L&G Insurance Broker, you’ll get the right insurance program, competitive premiums, and claims support through to completion.

Contact L&G Insurance Broker now and ensure your project is safe, efficient, and bankable!

DON’T WASTE YOUR TIME AND SECURE YOUR FINANCIAL AND BUSINESS WITH THE RIGHT INSURANCE.

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Website: lngrisk.co.id

Email: halo@lngrisk.co.id