Battery storage systems have taken the renewable energy industry by storm. The United States in particular has seen a surge of these systems hitting the market, offering homeowners and businesses reliable power solutions that can help to easily integrate batteries with solar farms or districts. With so many people looking to invest in battery storage solutions, there is an important question many need answered: what sort of insurance is needed for these systems?

Battery storage insurance is a type of insurance that covers the financial costs associated with battery storage systems. This includes damages or losses incurred from mechanical breakdowns, fire and theft, as well as any sort of system malfunction or failure. It also protects against third-party liability claims for personal injury or property damage caused by your battery storage system.

We Offer the Best Deals on Battery Energy Storage Systems (BESS) Insurance

Elemental Risk Management specializes in insurance solutions for renewable energy and battery storage systems. We offer affordable and comprehensive coverage for all types of battery storage setups, from small residential systems to large commercial storage farms. Our policies are tailored to meet your specific needs and budget.

For a free quote or to learn more about our battery energy storage systems options, contact us today.

Common Hazards Associated with Lithium-Ion Battery Energy Storage Systems

When it comes to battery storage systems, some common hazards that could happen include:

Overvoltage or short circuit caused by a surge of electricity, which can damage the system and other items in the vicinity. This can be caused by faulty wiring, incorrect installation or poor maintenance.
Fire hazard due to the high temperatures that lithium ion batteries generate.
Theft of equipment due to inadequate security measures.
Damage caused by mishandling or incorrect installation.
Issues related to energy management systems, such as incorrect charging and discharging.
Chemical release due to leaking, corroding or rusting batteries.
Stranded energy due to external events such as a power outage.

Other potential hazards can also arise, so it is important to understand what is needed to cover these risks.

Who Needs Battery Energy Storage Systems Insurance?

Each situation is unique, so it's important to speak with an insurance professional to determine the best coverage for your particular needs. However, some of the main groups that typically need battery storage insurance include:

Battery manufacturers
Battery storage system installers and contractors
Homeowners or businesses that own or operate battery storage systems
Utility companies
Solar farms
Battery storage system operators
Energy management firms
Municipalities or other local governments that own battery storage systems
Schools and universities that have installed battery storage systems
Business owners who use battery storage systems to power their premises.
Contractors who use/or operate battery storage systems

In simple terms, battery energy storage systems insurance intended for manufacturers, systems integrators, installers contractors, and system owners.

Underwriting Requirements for Battery Energy Storage Systems (BESS)

Depending on the type of battery energy storage business, the required insurance coverage will vary. For instance, a battery manufacturer might need commercial general and product liability insurance, whereas an energy storage project developer may need extended warranty or performance insurance. The applicant's business and system information will determine the underwriting process. Some of the information that may be required for underwriting are:

System design, size, and capacity - some insurers will require detailed plans and specifications for the system.
Inverter details - this is often required, especially if the inverter is not the same brand as the battery
Type of batteries used in the system (eg, lithium-ion or lead acid)
Number of batteries installed in the system
Manufacturer and model of the battery storage system
Location of the storage system and other relevant details
System certification and compliance
Maintenance and safety protocols
Financial investments in the system, such as warranties or performance guarantees
Expected power output from the system
Liability Limitations
Insurance history and record of losses
Security measures in place to protect against theft or damage

More goes into the underwriting process for battery energy storage systems insurance. It's important to work with an experienced broker who can help you navigate the complexities of finding the right coverage.

Forms Of Insurance Coverage Available For Battery Energy Storage Systems

Depending on the type of business you own, there are a number of different insurance coverages that you can purchase for your battery storage system. Some of the more common types of insurance coverage include:

Property Damage Insurance

Property damage insurance is a type of coverage that protects battery energy storage companies from the financial losses caused by damage to their physical assets, such as lithium-ion batteries, inverters, transformers, and other equipment. Property damage insurance can cover various perils, such as fire, wind, flood, hail, theft, vandalism, and equipment breakdown. Depending on the policy, property damage insurance may also cover business interruption, loss of income, and extra expenses incurred due to a covered loss.

Battery energy storage companies in New Mexico may need property damage insurance to protect their investments and operations from the risks associated with storing and managing large amounts of electrical energy. This is especially so because New Mexico has a diverse climate and geography, which can pose challenges for battery energy storage systems. For example, high temperatures and humidity can affect the performance and lifespan of lithium-ion batteries, while extreme weather events such as thunderstorms, tornadoes, and wildfires can cause physical damage or power outages.

Commercial General Insurance

Commercial general insurance is a type of coverage that protects battery energy storage businesses from third-party claims. This includes damage to property and bodily injury sustained by third parties due to the operations of the business or any products or services it provides. Commercial general insurance can also cover product liability, professional indemnity, and workers' compensation.

The type of protection offered by commercial general insurance depends on the policy. However, it typically covers the legal costs and expenses associated with defending a claim (including court costs, witness fees, settlement payments, and other related expenses). It may also cover any damages that are awarded to the claimant should your business be found liable.

Business Interruption Insurance

When faced with a battery energy storage system failure, business interruption insurance can help cover the financial losses associated with lost income, unpaid bills, and other related expenses. This type of coverage is particularly important for businesses that rely on stored electricity for their operations and services. In the event of a power outage or system malfunction, business interruption insurance can help offset the costs associated with restoring operations and recouping lost income. It can also cover additional expenses, such as those incurred for hiring temporary personnel or purchasing new equipment.

Performance Insurance

Also known as performance bond insurance, this type of coverage protects battery energy storage companies from the risks associated with non-performance. Performance insurance is especially helpful for businesses that enter into contracts with customers or other partners to provide a certain level of power output (measured in megawatt-hours and/or kilowatt-hours).

In the event that the battery energy storage system fails to meet the predetermined performance criteria, performance insurance can help cover any damages or additional costs incurred by the customer. The protection provided by performance insurance typically includes indemnification for any losses sustained due to failure to fulfill a contract's terms, as well as legal fees and other related expenses.

Equipment Coverage

Equipment coverage safeguards battery energy storage firms from equipment loss or damage resulting from different risks. These risks include natural disasters, theft, vandalism, or fire. With equipment coverage, you can get financial assistance to repair or replace damaged equipment. Additionally, you can receive compensation for lost income arising from operations downtime.

If a business's equipment is destroyed or damaged beyond repair, the insurance company can provide funds to help purchase new equipment.

Workers' Compensation Insurance

In New Mexico, worker's compensation insurance is required for all employers with three or more employees. This type of coverage helps pay for medical bills and lost wages if an employee is injured or becomes ill on the job. Without worker's compensation insurance, a battery energy storage company could face significant financial exposure from work-related accidents or illnesses. In some cases, injured employees may be able to sue the company to recover damages. Worker's compensation insurance helps mitigate this risk by providing guaranteed benefits to employees regardless of who is at fault for an injury or illness.

Product Liability Insurance

Manufacturers and distributors of battery energy storage systems may want to consider product liability insurance. This coverage protects against claims arising from injuries or property damage caused by defective products. Without product liability insurance, a company could face significant legal costs and damages in the event of a product defect lawsuit. Product liability insurance helps cover the costs of defending against such claims and paying any settlements or judgments. The specific terms and coverage limits will depend on the policy details.

Get The Best Battery Storage Insurance Systems

You are a few steps away from getting the right insurance protection for your battery energy storage systems business.

Here at Elemental Risk Management, we work with top insurance carriers to provide competitive quotes tailored to your coverage needs and budget. Our team of licensed brokers can help you evaluate different policy options and choose a comprehensive solution that protects your business from the unique risks it faces.

For a free consultation and insurance quote, contact us today.

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If you are preparing to start a valet service at your business, be sure to consider safety issues, legal requirements, and additional coverage options so that you can find the best possible coverage for your budget and needs.

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