Don’t Get Burned: Solar Insurance Tips from RCM&D’s Senior Risk Advisor
About this episode
Brian Villari knows solar insurance inside and out—and in this episode, he breaks down what you actually need to protect your business. From general liability to workers' comp, he unpacks the fine print, clears up claims-made vs. occurrence policies, and makes a solid case for why safety culture matters. If you’re scaling, merging, or just trying to avoid surprise claims, this one’s packed with real talk and cost-saving tips.
Transcript
I will say that our business is stronger than it has ever been. The success of growth and where I see companies growing consistently really is your people. I mean, the story is not does it make power? Because they all make power. The story is what does it power?
Brian:This is what solar installers need to know with your host Herve Billie and Joe Mahamati.
Hervé:Hi there. It's Herve and Joe in what solar installers need to know, where we interview solar CEOs and experts on how they run their business on the solar cluster. We ask their private revenue numbers. We give actionable advice and learn about trade secrets so you can run and grow your solar business. Joe and I built a solar company from 0 to 12,000,000 sales and got successfully acquired.
Hervé:If you'd like to do the same or do better, go to sunro dot com slash blog to get actionable behind the scenes lessons on running and growing your solar business. And now without further ado, let's jump right into the next episode. Welcome to another episode of what solar installers need to know, and we welcome Brian Villarney. Brian is with the insurance company called RCMND. He's one of the top 40 independent insurance companies in The US, has around 200 employees, works in the Mid Atlantic, but also all over The US, works in has offices in Virginia, Maryland, DC, Pennsylvania.
Hervé:Welcome, Brian.
Brian:Thanks for having me on, Herve.
Hervé:So I had a solar company, and then I was in insured. In the very early days, what actually happened is that I found somebody running a roofing company, and he had a very cheap insurance, he said. He's like, that sounds great. And I only paid a few $100 a month in insurance. And then I realized that I was not really getting insurance.
Hervé:Like, okay. Technically, I had a certificate of insurance I could use, but there was there was nothing on it, basically. And then we met at a solar conference. And, Brian, you explained how insurance works. And it was not just a few $100.
Hervé:But maybe first question is, what are the different types of insurance that a solar company should have on their certificate of insurance?
Brian:The insurance certificate of insurance is probably a really good baseline. Right? So when you have a certificate of insurance, it is simply a snapshot high, high level snapshot of what is on or could be on the insurance. General liability, auto, workers' compensation, all of the third party liability coverages would be listed. Professional liability, if you have that, pollution.
Brian:Any of those coverage will be listed on certificate. I always say, though, a certificate of insurance does not give the details. So for example, you know, there could be exclusions on a company's general liability policy that you don't know about. So you have a certificate of insurance. You think that they have all the right coverages.
Brian:You look and see that they carry a million dollars of general liability insurance. But let's say a claim happens and you turn to your sub and say, hey, sub. You messed up. I'm gonna look to you, to your insurance. I have this certificate.
Brian:I have this piece of paper that's so important, and it shows a limit. And they put the claim in, and they and their company comes back and says, no. You have this exclusion on your general liability, so we're gonna deny it. And now you're left holding the bag. So it's really important to understand what your subcontractors carry more so than just a certificate of insurance because the devil's always on the details when it comes to an insurance contract.
Hervé:True. Devil's in the detail, but a lot of CEOs listening, they cannot just read all those policies of I mean, sometimes what what you're saying was hundreds of pages. So
Brian:I Yeah. So what I always recommend, yeah, what I always recommend doing is sending them to your to your broker. So and if your broker doesn't do that as a service, you find a broker that does? So, like, if you have a subcontractor, you get them to sign their subcontracting agreement and a certificate of insurance. I always say request a copy of the actual insurance policy.
Brian:Send that to your broker. Quick review, right, of the terms and conditions page, and away you go. So I that that would be my recommendation.
Hervé:Alright. For for maybe newer CEOs, can you explain just the key items? What is general liability? What is workers' comp?
Brian:Sure. General liability, boiled down to a nutshell, is any property damage or bodily injury to a third party. So we're not talking about your employees. We're talking about if Joe Schmo walks into your office, hurts themselves, or you have a job that's completed or ongoing and there's an injury or property damage stemming from that, that's general liability. There are some covered general liability forms that include professional liability, and that's one of the biggest gaps in coverage I see when it comes to solar is most solar companies do not carry professional liability.
Brian:So there's this natural
Hervé:That's one thing we had early on. Yeah. As officers of the company, if you make decisions based as part of the company, as an officer that even if it's a lawsuit, you're not personally liable for any of that. Right?
Brian:That's directors and officers. Yeah. So directors and officers insurance covers personal liability for for those officer or owners of an organization making erroneous decisions or alleged erroneous decisions. But the professional liability, there's this natural gap in insurance where let's say you go out and do a job. A lot of contractors may call it rip out and tear out redo work where you go out on a job and install a solar system and the and the and the client says, we didn't agree to that or you used the wrong materials or you basically just screwed up on the actual installation of of the work.
Brian:Typically, the contractor's gonna have to redo the work. They're not gonna get paid until they redo the work. So professional liability can cover faulty workmanship, faulty installation. There's a whole host of things that could be covered on a professional liability policy. So most solar companies don't carry that unless it's required by a contract, then they obviously do.
Brian:But if it was left up to their own decisions, they probably wouldn't cover it, and that's a big mistake in
Hervé:Now where's the limit between bonding and professional liability? Once I was doing, like, larger, like, large commercial, they required bonding, which is, like, if my business goes under or something, they have money to go finish a job.
Brian:Yeah. Most most common bond is payment and performance bond. It's important, though, a bond or surety is not insurance. Two different things. When you take a bond, your spouse are personally gonna indemnify the surety if they have to step in and take over the the project because you're unable to do it, which is why most surety companies either require some type of collateral.
Brian:Or if it's a smaller bond, usually half a million or a million and less, then they do it off of a credit check. So they'll they'll do a soft hit on the owners of the company's credit history. And if it's acceptable, depending on the surety carriers, you know, guidelines, they'll issue the surety, then you'll sign off, but you are gonna personally indemnify. The the the purpose or intent of a surety carrier is never to have a loss. So if they do have to step in, then they will they'll go after you for that on the back end.
Hervé:Okay. So we spoke about general liability. We spoke about professional liability, directors, and officers protection. So workers' comp, what is Workers'
Brian:comp, plain and simple. If an employee gets hurt on a job, they're injured, they get workers' comp benefits. Someone falls off a roof, someone throws her back out from lifting solar panels up the up the ladder, whatever the case is, they get medical and indemnity opportunity for help from the insurance company.
Hervé:Yep. Maybe I shouldn't say this a lot, maybe not even recorded, but in the very, very early days of Ipsum, all insurance was super cheap. What I found out is our workers' comp was, like, super cheap because they were not considered people sitting on roofs. And now when we had our conversation, like, well, yeah, obviously, they're on roofs. I told that to the insurance company.
Hervé:Somehow, I got a super cheap quote, and I was happy at that time. So make sure that the the employees every time every year you ask me for an update. Right? Like, how many employees you have? How many are on the roof compared to in the office?
Hervé:And how many electricians and all that? It's different rates. Right?
Brian:Yes. Absolutely. You wanna do every renewal, you wanna look at your payrolls, but you also wanna make sure that you're doing it right. So people who are not in clerical positions, you know and that's why clerical is so cheap because the exposure is low versus if you're on a roof in the field. I mean, it makes sense.
Hervé:Yep. One more piece that I like to ask you about, what is the difference between a claim based insurance and occurrence occurrence based?
Brian:Yeah. Yeah. So some policies are on a claims made and and and some are occurrence. It essentially just means when or rather what carrier is gonna step in at time of loss. So think about it this way.
Brian:The carrier that was on the claim or on the policy rather when the time of the loss on an occurrence form will step in versus on a claims made, it's whenever the actual claim is made. Let's say, for example, you have a claim from five years ago and it rolls in today and you're on an occurrence form. The carrier back then is the carrier that will step in and defend you. On a claims made form, the claim was made today. So the claim the carrier on it today that you have as your insurance company will step in.
Hervé:Two vastly different pieces that I hope SOCO is looking to make sure they understand which one they have.
Brian:Yeah. And most important is, like, if you switch forms. So if if one carrier is offering an occurrence form and you're on an occurrence form, then you say, well, this other insurance company is is offering me better terms and conditions, but they're on a claims made form or vice versa. You have to watch out for that and be careful if you're switching back and forth forms because there could be a gap in coverage.
Hervé:The gap, to be more specific, you took an example five years ago. There was a project. You were insured at that time with occurrence, and you stop and go to a claims base when a claim is being made. Actually, if a claim is made next month for that project that was insured on a occurrence base, now you're covered twice.
Brian:Yeah. So there's things called tail coverage. Tail coverage, meaning it's just gonna cover you for claims in the past. There's things called retroactive dates on on claims made policies that you need to make sure they are concurrent so that there's no lapping coverage. There's a lot of details.
Brian:So I would say, overall, just understand, are you on a claims made or occurrence? And if you're going to switch forms, have the conversation with your broker to make sure that it's gonna be done correct.
Hervé:Alright. Fantastic. Since you talk with so many solar companies without naming anyone specifically, but you clearly have a different view of the solar industry by working and seeing the the the good, the bad, and the ugly. Because if everything goes fine, you don't get the call in the middle of the night by like, oh, this project goes overly wrong. Right?
Hervé:So you only see the the bad side, I guess. But tell me about your first impression working with a solar company. How do you know if it's gonna be if you deal with a a good solar company or a bad one, if it's a strong company or a weak one? Like, what are some some first impressions of that a company makes on you to to to categorize a company like that?
Brian:Yeah. First impressions are everything. But at this point, I've been on the broker side of the business for fifteen years, and the carrier started in the on the carrier side of the business for a few years. Coming on my nineteenth year in in insurance. At this point Reds.
Brian:I could tell what the story is gonna be right out the gate, especially on solar because solar has taken off in recent years to the positive. I mean, a lot of solar companies have seen tremendous growth.
Hervé:Mhmm.
Brian:But with that comes growing pains, and a lot of companies are not set up to ride that train in a positive way. It comes down to safety culture. I mean, owners, c suite, CEOs, if they don't have a safety culture, either established or understanding importance of one, things are gonna fall off the track real fast because every no matter what size, insurance is always a top five line item on everyone's financials. Everyone was watching insurance costs, whether that's property casualty, employee benefits, whatever the case is. But particularly in property casualty, business insurance, the insurance companies will give the best terms and conditions, meaning the most competitive pricing to those solar companies that are the safest.
Brian:Makes sense. Right? So those that are investing in things like dash cameras, telematics for their for their trucks. They have a safety committee. They have proper PPE for all their employees.
Brian:They have a thumb or a pulse on what OSHA's looking for. They have OSHA training. They're doing toolbox talks. They're doing drug testing. All of these things that a company does benefits them because they're gonna have less claims.
Brian:And then also when we negotiate on their behalf with underwriters, I'm able to say, mister underwriter, missus underwriter, Herve deserves this price that I'm asking for because he's safer than the solar company that just popped up two weeks ago that's on your desk as well. So give Herve the discount on the insurance, the better pricing, the better terms and conditions, and give the solar company that's not behaving in that same manner the higher price.
Hervé:So, basically, everybody listening, if you know your insurance numbers and you know it's high, either you have a broker that didn't negotiate it well on your behalf, or you need to look inside the mirror and maybe you do not have what you've mentioned, like OSHA training, safety meetings, like an entire culture based on safety that would bring your your price down.
Brian:Yeah. Absolutely. I mean, it's important to understand, you know, there are a lot like, I'm not the only broker that specializes in solar that focuses on solar. There are a handful of us that, you know, focus on your industry. And so you need to, you know, find a broker that's not the one you already have, someone who understands what you do.
Brian:I always say I call it a broker ROI. You know, what are you getting for the money you're spending? If you you know, for everyone listening, if you take your annualized premium on your property casualty insurance program and you add that up, take 10 to 12% of that, that's typically what the insurance broker is collecting commissions from the insurance carrier. So if you're paying a $100,000 in premium, typically, the broker that you're with is is getting 10 to $12,000 in commission. So you need to look at that and say yourself, okay.
Brian:Am I getting training? Am I getting do I feel as though my broker's negotiating the best terms and conditions for me? Are they fighting on my behalf? Are they doing all these things? There's a lot of opportunity for especially newer solar companies to control their destiny with insurance.
Hervé:Well, talking about different services that that insurance company provides, the basic one is obviously getting the insurance coverage that you actually need to provide that advice about what's needed and what's not. Another piece I remember, like, every time you buy cars, we need, like, another certificate of insurance quickly to kind of drive that car up the lot. And that's like, do the answer on time. And because I'm like, I'm really we have somebody in the office, need to drive the car. We need that insurance piece of paper now.
Hervé:What are some other services that that insurance companies provide solar companies?
Brian:Insurance companies. So two two different ways to think about it. The solar company themselves, like the carrier, they have resources, and sometimes they have prenegotiated vendor discounts. So talk about cameras. Right?
Brian:Insurance companies want people to put dash cameras, telematics in their vehicles, and now they're partnered with companies to give discounts for that. So there's services you could get through your actual insurance company and then services that your broker themselves, their firm may or may not be able to provide in house as well. So you should be investigating both of those avenues and saying, what what can I get from both of those folks?
Hervé:I remember we had another podcast with Art Controller, and they just put cameras in their vans, a lot of meetings and conversations with the employees. They actually put it in. A lot of pushback, though. But once they put it in, there was an accident, like, a few weeks later, and the dashboard was then used to show that the employee was actually driving. And another car literally came out of nowhere and hit them.
Hervé:So there is one clear example where it wasn't like Big Brother watching you. It was actually good to have that dashcam and and show that the employee was actually not on their cell phone.
Brian:Well, we talked about initially. Right? If you have the right culture, then typically, dash cameras are no big deal. But then it is a very good investment. I've seen countless situations where people are able to get out of accidents because they have the footage.
Hervé:Alright. Talking about accidents. What are some of the worst claims that you've seen in this industry or maybe some funny claims like Yeah. I've seen
Brian:a lot. Most common let's start on the most common. Most common claims are from the actual faulty installation. So, you know, water damage claims, water leak claims, so probably not sealing, you know, their work. I've had a couple where wind has been a factor where so it's picked up in a rain, smashed it back down someone's roof or barn or something like that.
Brian:I've seen fires, which is a big problem right now. A lot of insurance companies are pushing back because they're concerned that firefighters are not gonna able to get on the roof to put out a fire properly if the solar system's on there. So that's a newer concern that we're seeing.
Hervé:That's been a conversation. I remember being part of legislation proposals in state of Virginia, and that that was part of it. Where some some firemen argue that I need to be on the roof, and other firemen are like, when's the last time that you went on the roof to open? Like so so there was there was a contradicting experiences and and techniques of of putting fires out.
Brian:Yeah. For sure. And so that that that that continues to be a a sticking point, but claims, you know, falling off ladders is a big one. Improper lifting, I've seen those. Fires, like I mentioned.
Brian:I've seen a lot of crazy claims for solar kind of running the gamut.
Hervé:Do you see more residential claims or commercial claims or, like, a lot lot I mean, by residential solar or commercial solar, or you see a bit of everything?
Brian:A little bit of everything. I will say this, though. From an insurance standpoint, there's a lot less and less residential work. If you are predominantly a residential contractor, you're gonna spend more money on insurance and be charged more than you will if you did predominantly commercial work. So that's something for listeners to keep in mind.
Brian:Like, if if there's initiative over the next five years, three years to push more commercial, you should do that. And I'm only talking about through the lens of insurance. Carriers want less and less residential exposure, predominantly because it's it it comes if you're doing townhouses, new construction, residential, just purely from the grouping of risk is a lot higher than if you have commercial projects. So proof of thought on that.
Hervé:If there is a roof leak, which, you know, we never have done that at a solar company. But imagine that you run a solar company and you it's I know it's hard to imagine that you would ever have a roof leak, But all the damage done because of that wolf leak, is that covered by professional liability?
Brian:General lie general liability. General liability. Property damage.
Hervé:Yep. Before we we we recorded this, we we talked a little bit, and you also mentioned that there were a lot of there's a lot of m and a's going on. So so tell me a little bit about what you see about m and a's in the sole industry or the industry in general. Why why is that? What what do you see happening?
Brian:There's just a lot of activity right now for a couple of reasons. One is the legacy type of company that's been around for a long time, maybe family owned or just doesn't have proper perpetuation in play. Don't have a they just don't have an opportunity. They don't have a resource and exit strategy. So they get to a point where, like, we have to sell because it's my only way of exiting.
Brian:They don't have employees that can financially buy them out. You know, I have kids in the business that wanna come up and learn the business and take it over. So that is definitely one area. There's a tremendous amount of venture capital, private equity out there that, you know, is looking at solar and looking at portfolios of solar because it is a vastly growing industry segment. It's probably one of the fastest growing industries.
Brian:So there's a lot of interest in it, a lot of understanding from an insurance standpoint. A lot of listeners may may hear about something called a captive insurance. It's like the the new sexy lingo these days in insurance. Basically, what it means is if you are a very good risk of a certain size Mhmm. A certain matrix, you can join other companies of your same ilk or join a group of different type of companies and create your own insurance company.
Brian:So instead of the insurance company making the profits, those profits can be retained within the captive and you can get profits. So what's what's happening is the larger companies, the the ones that have their stuff together, instead of them staying in the guaranteed market, which is a traditional insurance policy, They're saying, we're gonna go take our skills and our and our great company, and we're gonna go into a captive, and we're gonna bet on ourselves. And often what that leads is an adverse selection. So we're seeing a lot of that, which puts pressure on companies to perform and to understand the importance of their brand. You know, I I say to a lot of CEOs and owners that you spend a lot of money marketing your company Mhmm.
Brian:Doing flyers, putting your brand on trucks, sponsoring events locally in neighborhoods, community outreach. But most owners and c suites fail to even understand the importance of how their brand is and what it is to insurance underwriters because that's the most important part. They're the ones you know, when I was an underwriter and and and a marketing rep and all that, we would have a stack of papers on a desk, and we would just work through it. You know? And if you didn't stand out, you were just another file on the desk.
Brian:Your brand is really important in understanding how to leverage that to get the best terms and conditions. So one recommendation for sure is think about that. You know, if you're an underwriter, if you're an insurance company, how would you view your own company, and what would you like to see? Because you're gonna ask that underwriter for a cheap insurance price. So you would expect as an underwriter that your company would have certain things in place.
Hervé:Okay. And can you repeat the term? What what I'd call it?
Brian:Captive insurance. Captive insurance program.
Hervé:Cool. Another thing I'd like to ask you is where can you save money on the insurance plans or when you go to your broker, I think it's too expensive. I wanna reduce it. What are some pieces that you maybe could cut or were pieces that you definitely never ever ever should compromise on?
Brian:Yeah. Never compromise on well, the basics you're gonna have to have to operate. General liability, auto, if you have autos, workers' compensation. You know, those are the those are the basics. Right?
Brian:And then if let's just assume that there's no contract in place requiring umbrella and stuff like that, certain limits. I would always always say before you cut insurance, look at retentions, deductibles. You know, go to the insurance company and say, hey. If I put more skin in the game, how much will that shave off of the premium? You know, if you historically don't have claims, if you're an organization that can take risk, if you have retained earnings in a company, things like that, you may be okay taking a a $25,000 deductible.
Brian:And the trade off is your premiums could get pretty low. So deductible is where I would start. And then if you have umbrella limits, things like that, you should be benchmarked against your peers. So your broker should be able to tell you of your size company, of the makeup of your company, what you do, where you operate. You know, we see companies of your size carrying these limits and and benchmark yourself and say, okay.
Brian:Well, you know, industry best is this. I'm carrying that. And make a decision in that way too. But for sure, the other thing that is these days a real must is cyber insurance. So cyber liability has been a real problem that these days is almost as warranted as general liability.
Brian:So, you know, that's a definite area to to look into.
Hervé:Alright. I don't think we ever played on our on our on our price there with our deductibles because we have a ton of retained earnings in the company. Alright. Well, too late, but definitely a tactic for for other people listening. Last question.
Hervé:How can installers build strong relationships with the insurance company? Because an insurance premium, like, it is not a small item on our balance sheet. So what are other ways to strengthen that relationship?
Brian:Yeah. Don't jump carrier to carrier. So you wanna build a relation with carrier. If if you move insurance companies every year, every two years, that tells the next underwriter that most likely they're just renting you as a policyholder for a short period of time because you're just gonna leave anyway. I always say, don't throw the baby out with the bathwater.
Brian:The carrier is typically not from what I've seen and experienced, the carrier's not the problem. It's the broker that's the problem. It's the broker that's not doing their job. It's the broker that's not meeting the expectations that you set. It's not necessarily the carrier.
Brian:The carrier's typically not utilized correctly. They're not asked to do what they should be doing. So that's where a broker record letter can come into play where you can say, hey, new broker. I want to use you, but I wanna keep the relationship of the current carrier intact. So you work with our insurance company and and and negotiate on our behalf, keeping that relationship intact, then also asking to meet the underwriter.
Brian:I mean, underwriters love, they love to go out, whether it's virtual or in person, and meet the policy order. So any chance you can, you know, ask. You know, the renewal's coming up. Can we set up a call with the underwriter? I'd like to just have a conversation with them.
Brian:And that goes a really long way. It really does.
Hervé:Yep. I remember at the renewal, we always took some time to kind of go over it again, refresh it, make sure you get insured for what you need. Like, if your employees leave, you then it's it's pointless for them to be insured. So make sure all your numbers are correct before you do the renewal. Absolutely.
Hervé:Alright. Well, Brian, I wanna thank you very much for this interview. It's been fantastic. And I think we got a nice refresh on the general liability, the workers' comp, professional liability, their work and offers coverage. And we learned I was new to that was new to him about captive insurance.
Hervé:So, hopefully, we learned something, and thank you for sharing your your knowledge, Brian.
Brian:Yeah. Thanks for having me on. I appreciate it.
Hervé:If you'd like to do the same or do better, go to sunvoy.com/blog and get actionable behind the scenes lessons on running and growing your solo business.