Renewable Guard conducts Q&A with over a dozen insurance carriers to address concerns over coverage for increased costs due to tariffs. Here are our findings and recommendations.
Whether you are taking a wait-and-see approach or believe tariffs are here to stay, many renewable energy developers are asking if they have coverage for the increase in construction costs resulting from recent American tariffs. Tariffs are driving up the cost of everything from steel, modules, and other industrial goods that are used in the renewable energy industry. The added cost has many developers and investors alike asking one simple question: am I covered?
Based on a survey of over a dozen carriers, we found that the answer varies by insurer. Nevertheless, there seems to be an overwhelming consensus and willingness to help. We here at Renewable Guard believe there are already existing endorsements and coverage in the policy that can be applied to address the tariffs.
Can a tariff insurance endorsement solve the shortfall in coverage?
Perhaps, but only if offered by your property insurance carrier or agreed to by your property insurance carrier. These standalone endorsements exist in the industry and while they can provide up to 20%+ of additional coverage, many come with the following challenges:
- Approval: Requires primary property carrier approval for a secondary carrier to provide the endorsement. This is likely going to be declined.
- Coverage Limitations: Coverage with these specialized endorsements are limited to increased cost of construction due to tariffs only. More broad endorsements exist with your primary carrier which allow you to cover tariffs along with any other increase required to reinstate values.
- Claims Payments: Claims are paid and managed by two separate carriers as opposed to one. This can impact timing of payment and difficulty with loss adjustments when trying to get two different carriers to agree.
- Added cost: Controlling cost becomes inefficient when approaching a secondary carrier to solve a monoline coverage issue. Using leverage with your incumbent primary carrier should lead to better pricing.
What next steps should Developers take to manage tariff risk
Procurement Risk Assessment: Where is your supply coming from and what is your potential total tariff exposure? Developers with Master Service Agreements from domestic manufacturers are likely more insulated from tariffs. Not every Developer’s exposure is the same.
Calculate your total exposure and then work with your broker to understand if you have enough existing limits or if it makes sense to obtain proposals for added coverage.
The recent announcements of tariffs have had a wide range of impacts on businesses and Renewable Guard is here to provide proactive consultation. We have the tools, expertise, and resources to provide Developers with the information they need to make important decisions about managing risk.
Please contact us if you are interested in learning more about how Renewable Guard can support you.
