The Complexity of Claims

Green Partners Adjusting: The Complexity of Claims

Renewable energy projects are engineered to operate in challenging conditions. Yet when something goes wrong, insureds and insurers can find themselves in policy grey areas outside the straightforward replacement of damaged components and direct loss of generation revenue.

The points of friction tend to appear in the space between responses to losses that are designed to shore-up operations, and policy intent: what counts as mitigation, what counts as an improvement, and what evidence is needed to link an interruption back to insured physical damage.

Below are three claim scenarios that Green Partners Adjusting commonly encounters where complexity repeatedly emerges for insureds and asset owners, and where prior clarity in policy scope can make a meaningful difference to outcomes and repair timelines.

1. Post-theft security: maintaining protection as it was, or funding an extra precaution against future losses?

After a theft from a wind or solar project – most commonly copper cabling – it is normal for an asset owner to tighten security. It’s a natural reaction for asset owners given that, in practice, thefts often arrive in clusters, with multiple sites within one geographic region hit in the same period. Once a site has been targeted, there is a natural concern regarding repeat offences – especially while replacement parts are being sourced and stored on site.

Operationally, the response is straightforward. A solar site that previously relied on CCTV may introduce manned patrols, sometimes overnight, sometimes 24/7. The problem is that the insurance treatment depends on what those additional measures are doing.

Where theft damage has left CCTV cameras offline, insureds would argue that temporary manned guarding is a direct replacement for the pre-loss security measure. In effect, you are maintaining the same level of protection that existed prior to the loss, simply substituting patrols for cameras until equipment is repaired. In that scenario, the argument for inclusion within the claim is often clearer.

The debate sharpens when security is increased beyond pre-loss levels. If additional guards, patrol frequency, or surveillance capability exceeds what was in place before, insurers may ask a direct question: what is that extra security there for?

The challenge is that enhanced security is usually aimed at preventing a potential future theft rather than addressing an imminent peril or forming part of repair works. That places it in a grey area. A classic way of expressing the issue is that fear of a peril is not equivalent to the operation of a peril in itself. In other words, even if the risk feels elevated and even if replacement equipment is on site, the cost may still be characterised as a precaution rather than a loss expense.

This creates a bind for asset owners. If they do not bolster security and a second theft occurs, they may face criticism for failing to act with due diligence to minimise a foreseeable loss. If they do bolster security, they may find the cost disputed because it goes beyond reinstating pre-loss conditions.

Some policy wordings address this head on with a specific clause for additional security costs, but these provisions are not common. Where the clause is absent, the discussion becomes fact and wording dependent, and the quantum is rarely trivial. Two weeks of 24/7 manned guarding can readily reach the tens of thousands.

Overall, in this scenario, insureds are advised to document pre-loss security arrangements, record when CCTV or security systems are damaged, and define the role and duration of temporary guarding (for example, guarding during periods of heightened risk on site when new loose materials form part of the construction works). The closer the measure is to maintaining pre-loss security levels, the clearer the argument for policy inclusion.

2. Temporary power on wind farms: mitigation, but possibly not recoverable

Whole-site outages present a distinct challenge for wind, particularly in winter. When an entire wind farm goes offline, all turbines lose auxiliary power. In cold and damp conditions, that can lead to moisture build-up and condensation inside turbines and electrical cabinets.

When the outage is resolved and turbines are re-energised, the result can be a wave of electrical faults and trips across the project. These issues are often minor individually, but collectively they can delay restart, increase maintenance burden, and create a second operational problem on top of the original outage.

The practical mitigation is to deploy diesel generators, once UPS power has been exhausted, to keep heaters and dehumidifiers running during the outage, protecting equipment condition and smoothing the restart, while potentially continuing to allow the machine to pitch and yaw correctly for safety.

The friction is where the cost of that back-up power generation sits under the policy.

Business Interruption (BI) cover generally includes not only loss of revenue, but also Increased Cost of Working, sometimes referred to as Extra Expense. The principle is that an insured can spend money to reduce the BI loss, for example by renting temporary equipment to restore operations sooner, because that reduces downtime and ultimately can reduce the insurer outlay.

However, temporary power in this scenario is not keeping turbines operating normally – exporting power to the grid. It is aimed at preventing a potential future issue at restart, namely electrical faults arising from condensation and possible mechanical challenges from idling, gearbox flat spotting and bearing brinelling – a key distinction.  The expenditure can be operationally sensible, but difficult to tie to the BI definition if it is not reducing the period of interruption or maintaining revenue generation.

Temporary power for asset preservation also struggles to find a natural home under material damage because the generators are not part of repair works.

For insureds, the argument is that they are investing in future mitigation – similar to the theft example above.  But insurers may possibly contest temporary power as an insurable claim.

3. Grid-caused outages and CBI: the evidence gap that delays big outcomes

Contingent Business Interruption (CBI) is where project dependency on third-party infrastructure becomes most visible. If grid equipment fails and takes a wind farm or BESS project offline, the revenue impact will always be significant because the entire site may be affected.

But CBI is not simply revenue loss owing to failure of a third party-owned transformer or grid connection.  For cover to attach, the interruption must be caused by physical damage to the third-party property, and critically, the nature of that damage must be something that would have been covered had it occurred to the insured’s own property under the physical damage section of its own policy.

Understandably, this is where claim progress often slows. The adjuster needs to know what failed, why it failed, and whether any exclusions might apply. Defect exclusions and wear and tear provisions vary. Some policies exclude defects outright. Others exclude the defective part but cover resultant damage. Many exclude wear and tear, but still respond if that wear and tear leads to other items of property damaged as a result.

In practice, grid operators may provide minimal information – only stating, for example, that a transformer fault occurred, without sharing cause analysis. Suppliers and contractors may also be reluctant to share investigation findings. Yet without causation detail, it becomes harder to confirm coverage intent, and both insured and insurers can find themselves in a protracted claims process.

One practical step that sits outside the claim, but can make claims easier to resolve, is to agree information sharing into third party agreements at the outset of project development.  Asset managers can seek connection agreement provisions, NDAs, or protocols that allow access to incident and root cause reporting. If insurance recovery depends on understanding causation, it is worth addressing information access as part of the risk management programme, not as an afterthought once an outage occurs.

Why these issues matter

The claims scenarios above all share the same theme: the claim hinges on the defined boundaries and wording of the policy. Maintaining versus improving. Mitigation versus precaution. Interruption versus the physical damage trigger. These are not academic distinctions. They determine recoverability, timeline, and ultimately the financial outcome for the project.

At Green Partners Adjusting, we see these friction points regularly across renewables portfolios, and we have developed communication strategies to properly address these frictions with the parties involved. Early technical investigation, careful documentation, and clear articulation of the purpose of spend can reduce dispute and speed resolution, particularly where policy wordings leave room for interpretation. Finding the juncture between the theoretical insurance contract and real-world incidents runs to the very core of Green Partners Adjusting’s services.

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