February 10, 2009

Liability Insurance Requirements for Interconnection

Additional liability insurance requirements can be a burden to customer-generators by forestalling the interconnection process and adding unnecessary costs to the bottom line, increasing payback time. To provide a broad picture of current state requirements, we created a map (see below for a link) and classified states’ policies into several categories. In doing so, we…

Additional liability insurance requirements can be a burden to customer-generators by forestalling the interconnection process and adding unnecessary costs to the bottom line, increasing payback time. To provide a broad picture of current state requirements, we created a map (see below for a link) and classified states’ policies into several categories. In doing so, we found that, among the 50 states (and D.C.):

• 12 do not require proof of liability insurance for net metering-eligible systems

• 10 do not specify any liability insurance requirements in the regulations

• 8 allow utilities to require proof of liability insurance, although not beyond what a “typical” customer would carry

• 3 have requirements for larger systems only, but smaller systems are exempt from additional liability insurance requirements

• 5 have tiered requirements for different size systems or customer classes (usually beyond what a typical customer would carry)

• The remaining 13 states do not have state-wide interconnection procedures

Policies were classified based on the states’ interconnection procedures for net metering-eligible systems, but I also tried to note if there were different requirements for net metering-ineligible systems (as in the cases of WA, CA, KY and MA). It is also worth noting that regulations and policies do not always fit neatly into ascribed categories. Some noteworthy examples:

• New Jersey exempts most interconnections from liability insurance requirements, but Level 3 (i.e. study track) systems might be required to provide proof of insurance.

• Hawaii exempts small systems (10 kW and under) from additional liability insurance requirements but does not appear to provide specific requirements for larger systems.

• Arkansas’s rules do not address liability insurance requirements, but many of the utility tariffs approved by the state Public Service Commission do not seem to require proof of insurance (i.e., utilities interpret unspecified policies differently — technically what an interconnection procedure is intended to avoid.)

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