Rooftop Solar Insurance in Malaysia: What Factory and Building Owners Need to Know

You've installed shiny new solar panels on your factory roof. Your fire insurance covers the building, so the panels are protected too, right? Wrong.

This is the single biggest misconception we see among Malaysian factory and building owners adding rooftop solar PV systems. Fire insurance only covers items listed on the schedule. If your solar panels aren't explicitly added as a separate schedule item, they are completely uninsured, regardless of your fire or industrial property policy.

That gap can cost you hundreds of thousands of ringgit in the event of a fire, theft, or weather damage.

Why Rooftop Solar Matters Now: The Solar ATAP Wave

Solar ATAP launched on 1 January 2026 with a game-changing shift in Malaysia's renewable energy landscape. Unlike NEM 3.0, which ended in June 2025, Solar ATAP has no quota limit and offers 10-year power purchase agreements for commercial installations.

For factory and building owners, the commercial capacity ceiling has increased to 100% of Maximum Demand (MD), up from 75% under the previous regime. Combined with the extension of the Green Investment Tax Allowance (GITA) through 2026 for solar and battery energy storage systems, rooftop installations have become financially attractive almost overnight.

More rooftop solar means more factory owners installing PV systems without realizing the insurance gaps that come with them.

The Insurance Gap: What Your Existing Fire Policy Does NOT Cover

Malaysian fire insurance policies protect against fire, explosion, lightning, and certain weather-related perils. But your fire policy schedule lists specific items and their sum insured values.

When you install rooftop solar panels, they are not automatically added to your schedule. The insurer has no record of them, no agreed value, and no coverage. Your fire insurance gap now includes a system worth potentially hundreds of thousands of ringgit sitting on top of your building.

Asset/Scenario	Covered by Standard Fire Policy?	Notes
Solar PV panels on roof (not on schedule)	No	Must be explicitly added to the schedule as a separate item
Inverters and electrical components	No	Also require separate schedule entry; mechanical/electrical breakdown excluded
Roof damage caused by panel installation	Partially	Installer's CGL and EAR should respond; your building policy may exclude contractor liability
Theft of panels, cabling, or inverters	No	Standard fire policy does not cover theft; requires endorsement or separate policy
Loss of solar energy production/revenue	No	Requires business interruption (BI) extension tied to the solar system
Inverter mechanical breakdown	No	Fire policy excludes mechanical and electrical breakdown; need machinery breakdown (MLOP) extension

The most dangerous gap: a factory owner installs RM500,000 of solar panels and believes they are covered because they have a RM2 million fire policy. They are not.

During Installation: What Your EPCC Contractor Must Have

Before shovels touch your roof, your EPCC (Engineering, Procurement, Construction & Commissioning) contractor must provide proof of insurance. The two critical policies are Erection All-Risk (EAR) and Contractors General Liability (CGL).

But here is the catch: not all EAR policies are created equal. The contractor's EAR must include Section III coverage (existing property). This protects damage to your building and roof while the solar installation is in progress.

Insurance Type	Who Should Have It	What It Covers During Installation
EAR (Erection All-Risk)	EPCC contractor (mandatory)	Damage to newly installed equipment (panels, inverters, cabling)
EAR Section III	EPCC contractor (check your contract)	Damage to your existing building and roof during installation; critical protection
CGL (Contractors General Liability)	EPCC contractor (mandatory)	Bodily injury and third-party property damage caused by contractor's negligence

If the contractor's EAR does not include Section III, your building owner bears the risk of roof damage during installation. Verify this in the contractor's insurance documentation before work begins, not after damage has occurred.

After Installation: Updating Your Fire or IAR Policy

Once the solar PV system is commissioned and the contractor's insurance period ends, your building's permanent insurance takes over. This means updating your fire or industrial property (IAR) policy.

The process is straightforward but must be done correctly. Contact your insurer and request a policy amendment to add the solar PV system as a separate schedule item. Do not assume your existing coverage will stretch to include it.

Step	Action	Key Consideration
1. Calculate sum insured	Full reinstatement cost: panels + inverters + mounting + cabling + labor	Use contractor's final invoices and equipment specs; overestimating is safer than underestimating
2. Request endorsement	Contact insurer; ask for solar PV system to be added to the schedule	Provide equipment list and sum insured figure; insurer may request photos of installation
3. Review average clause	Confirm that average clause applies per item, not across all property	If sum insured is too low, a claim may be reduced proportionally; per-item average is more favorable
4. Consider add-ons	Ask about theft endorsement, business interruption rider, and machinery breakdown extension	Premium will increase but gaps are filled; weigh cost against risk exposure
5. Obtain amended policy	Request written endorsement or new schedule reflecting solar system addition	Do not rely on emails; keep official policy amendment on file for claim evidence

One critical point: the average clause applies per item on your schedule. If you underinsure the solar system, your claim payout will be reduced in proportion to the underinsurance. For example, if your solar system is worth RM500,000 but you only insure it for RM350,000, a RM400,000 claim will be reduced by 30%.

Ownership Models and Who Bears the Insurance Responsibility

Not all rooftop solar installations follow the same ownership structure. Your insurance responsibility depends on who owns the panels.

Model 1: Self-Owned Solar System

You own and operate the panels; you receive 100% of the energy credits under Solar ATAP. You are responsible for adding the solar system to your fire or IAR policy schedule.

Model 2: Power Purchase Agreement (PPA) or Lease

The solar company owns and operates the panels on your roof; you buy electricity at an agreed rate or receive a lease payment. In this case, the solar company should insure their own equipment under their insurance policies.

However, do not assume the solar company's insurance covers everything. Request proof of their coverage and confirm that their policy includes damage to your building roof if something goes wrong. Your building is still at risk if, for example, panels fall during a storm and damage your roof. Ensure your building insurance is not negated by the solar installation and that the solar company's liability covers roof damage.

Model 3: Damage to Your Building Caused by Solar Defect

If the solar installation is defective and causes damage to your roof or building, the installer's General Liability (GL) and Contractors All-Risk (CAR) insurance should respond. This is separate from the PPA ownership question.

Request a copy of the installer's insurance certificates before installation begins and confirm that the term extends at least 12 months after commissioning. Many disputes arise when an insurer denies a claim because the contractor's insurance has expired.

Ownership Model	Who Insures the Solar System	Building Owner's Responsibility
Self-owned	Building owner adds to fire/IAR schedule	Full responsibility; must update policy and maintain coverage
PPA/Lease (solar company owns)	Solar company insures their equipment	Verify solar company's coverage; ensure building policy not negated; check GL covers roof damage
Installation defect liability (all models)	Installer's CGL and EAR (during construction); extended GL (12+ months post-construction)	Request insurance certificates; verify coverage term extends beyond commissioning date

Practical Checklist: Adding Rooftop Solar to Your Insurance

Before Installation Begins

• Request EPCC contractor's insurance certificates: EAR (with Section III), CGL, and professional indemnity
• Verify EAR Section III explicitly covers existing property damage; obtain signed confirmation
• Review your fire/IAR policy wording to understand what can and cannot be added
• Document the roof condition with photos and date; this helps defend against pre-installation damage claims
• Notify your insurer that solar installation is planned; some policies require advance notice

During Installation

• Monitor contractor compliance with safety and insurance requirements
• Keep copies of all contractor daily reports and inspection certificates
• Document the condition of the roof and building during and after installation
• Ensure contractor's EAR remains active until final inspection is complete and signed off

After Commissioning

• Gather final invoices and equipment specifications for all panels, inverters, mounting, and cabling
• Calculate total reinstatement value; use latest market prices if invoices are incomplete
• Contact your insurer within 30 days of commissioning to request endorsement adding solar to the schedule
• Confirm the sum insured, coverage limits, and whether theft, business interruption, and machinery breakdown are included
• Request written confirmation of the amendment; do not accept oral confirmation

Annually

• Review your sum insured for inflation; equipment costs increase over time
• Confirm the solar system remains listed on your policy schedule at renewal
• Update your insurer of any modifications to the system (e.g., additional panels, new inverter)
• Keep maintenance records and performance reports; these help support future claims

Frequently Asked Questions

Does my fire insurance automatically cover solar panels?

No. Fire insurance only covers items listed on your schedule. Solar panels are not automatically included unless you specifically request an endorsement adding them as a separate item with an agreed sum insured.

What if my solar system is worth RM300,000 but I only insured it for RM200,000?

Your fire insurance will apply the average clause per item. If a total loss occurs, your claim will be reduced by 33% (RM200,000 divided by RM300,000). Accurate valuation is critical to avoid unintended underinsurance.

Can my building's fire insurance and the solar company's PPA insurance conflict?

Not typically, but gaps can occur. The solar company insures their equipment; you must ensure your building policy covers your roof and building structure if the solar installation causes damage. Request clarity on exclusions or limitations in both policies before signing the PPA.

Does fire insurance cover mechanical breakdown of inverters?

No. Fire insurance excludes mechanical and electrical breakdown. If you want to insure against inverter failure, you need a machinery breakdown (MLOP) extension or separate policy. However, inverter failure is often a warranty matter handled by the manufacturer.

What if the solar company's panel breaks my roof during installation?

The installer's EAR insurance (Section III) and CGL should respond. This is why it is critical to verify these coverages and the policy period before installation. The damage is the installer's responsibility, not yours, provided they have adequate insurance.

Do I need business interruption insurance for my solar system?

If the solar system generates revenue through Solar ATAP credits or energy sales, you may benefit from a business interruption extension that covers loss of energy production due to insured perils. The cost-benefit depends on your system size and revenue. Consider this when reviewing your policy with your insurer.

Key Takeaways

The rooftop solar wave in Malaysia is real, and the incentives under Solar ATAP are compelling. But insurance gaps are just as real. Your existing fire or industrial property policy does not cover solar panels unless you explicitly add them to the schedule with a clear sum insured value.

Before installation, verify that your EPCC contractor has EAR insurance with Section III coverage. After commissioning, request an endorsement to your fire or IAR policy within 30 days. Calculate the full reinstatement cost of panels, inverters, mounting, and cabling, and insure that amount per item to avoid average clause penalties.

If you are entering a PPA or lease arrangement, confirm the solar company's insurance coverage and ensure your building policy is not negated by the installation. These steps take minimal time but can save you hundreds of thousands of ringgit in the event of a loss.

Explore Related Articles

For more context on solar energy insurance in Malaysia, read our complete solar insurance guide. For deeper dives into fire coverage and underinsurance, see our articles on fire insurance exclusions and the average clause. If you manage a factory, our manufacturing property insurance guide covers broader risk considerations.

• Solar Energy Insurance in Malaysia: Complete Guide (Article 1 hub)
• Fire Insurance
• Industrial Property Insurance (IAR)
• Machinery Breakdown (MLOP)
• Erection All-Risk (EAR) Insurance
• Fire Insurance in Malaysia: Coverage and Exclusions Guide
• Average Clause in Fire Insurance: Malaysia Underinsurance Guide
• Building Owner and Tenant Fire Insurance in Malaysia Guide
• Manufacturing and Factory Insurance in Malaysia

Disclaimer: This article provides general guidance on insurance coverage available in the Malaysian market as of April 2026. Policy terms, conditions, and availability vary by insurer. Always review your specific policy wording or consult a qualified insurance professional before making coverage decisions.