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Many Floridians are quickly realizing the value of a solar home improvement. At a recent discussion workshop held by the Florida Public Services Commission (FPSC) in September of 2020, Duke Energy reported that they were interconnecting 1000+ new solar-powered residences per month. Floridians can attest that this data passes the eye test, as rooftop solar is increasingly visible in communities across the state (even being required on new construction in South Miami).
However, despite this rapid growth of solar in the Sunshine State, the path to energy independence is clearer for some homeowners than others. Utility companies in Florida currently separate solar systems into tiers, determined by system size which is measured in Kilowatts (kW). The exact terms of each utility company's Interconnection Agreement may vary, though there are three tiers that are generally recognized throughout the state:
Tier 1: systems less than or equal to 10 kW (or 11.7 kW DC)*
Tier 2: systems larger than 10 kW up to 100 kW
Tier 3: systems larger 100kW
While many homeowners are able to cover their energy needs with a Tier 1 system, systems of 10kW and larger are an increasingly common solution for many homes.
Currently, for Tier 2 systems, utility companies in the state of Florida require proof a particular insurance policy - a Personal Liability Policy (PLP) of at least $1 million.
The utility company's rationale is that it must protect itself from liability should a customer-owned system cause injury or worse. Notwithstanding, these requirements remain controversial across many states, including Florida. At the aforementioned utility workshop last September, when pressed by FPSC Board Member Max Vogel on the what specific risks this extra insurance is supposed to cover the present Duke Energy representatives stated, "There is no potential risk that I can identify for you."
Although disputes are ongoing regarding the justification and necessity of this requirement, many Florida homeowners are currently forced to either comply - by obtaining the $1 million PLP - or forfeit their freedom to choose how they source their electricity. The description of the requirement alone - "proof of general liability insurance of $1 million" - is a daunting deterrent. However, thanks to the general affordability of most PLPs many homeowners are still able to realize considerable savings on their electricity costs, even with the additional requirements in place for Tier 2 systems.
Many insurance companies are unfamiliar with this requirement, and confusion can arise when asking your insurance agent to, "insure my solar panels for $1 million." When communicating with your insurance agent, be sure to communicate clearly that you need a Personal Liability Policy - or PLP - of $1 million.
You may find it easier to communicate with an insurance agent that is familiar with this insurance in regards to the Interconnection requirement. More insight has been provided by Kirk Jones, CPCU, on the details of PLPs. Kirk has been an insurance agent for 13 years and is the Agency Owner at Enterprise Insurance Advisors in Lake Mary, Florida.
A Personal Liability Policy (PLP) is commonly referred to as an umbrella policy. A PLP provides the policyholder with an additional layer of coverage that goes above and beyond the policyholder’s home and auto insurance liability coverage limits, in the event a person is seriously injured at fault of the policyholder. For example, if a person is injured on the policyholder’s property, a typical home policy may provide liability coverage up to $300,000. If the injured party’s losses exceed the liability limits of the home policy, the policyholder will be liable for the remaining balance. The policyholder could have their wages garnished, their retirement funds affected, a lien could be placed against their property, or a judgment placed against them if they do not have enough coverage to pay for all of the injured party’s losses.
The PLP provides an additional $1 million dollars of liability coverage to better protect the policyholder’s current assets and future earnings.
PLP’s provide liability coverage while the policyholder is driving, at home, or away from home. Therefore, the risk for the insurance company that writes an umbrella policy can be significantly different from one policyholder to the next, even if they are neighbors. The number of drivers and vehicles in a household, the driving and liability claim history, occupation, along with other factors will determine how much a PLP will cost. That said, PLP’s generally cost around $500/year for a low-risk policyholder.
Note: The sizing tiers established by Florida-based utility companies are typically measured in alternating current (AC) wattage, whereas most solar companies refer to the size of the system in direct current (DC) wattage. For comparison purposes: 10kW (AC) = 11.7kW (DC) x 85%
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