Solar PV All Risk Insurance in Malaysia: What It Covers, What It Misses, and When You Need More

Is a Solar PV All Risk policy enough to protect your solar investment? For many commercial installations in Malaysia, it is a good starting point, but not the full picture.

Solar PV All Risk insurance is a packaged product designed to simplify coverage for owners of rooftop and utility-scale solar systems. It bundles common perils like fire, theft, and accidental damage into a single policy, often with optional business interruption protection. However, understanding what these policies actually cover, what gaps they leave, and when you need additional insurance, is critical to avoiding costly protection failures.

This guide explains the structure of Solar PV All Risk products in Malaysia, compares them to bespoke coverage stacks, and helps you decide when a packaged policy is sufficient and when you need more.

What Solar PV All Risk Insurance Actually Is

Solar PV All Risk is not a standard market term defined by regulators or international insurance bodies. Instead, it is a retail insurance product created and branded by individual Malaysian insurers to appeal to solar owners seeking simplicity. Each insurer packages their own combination of coverages under this label.

Typically, a Solar PV All Risk policy bundles fire, theft, accidental damage, and sometimes business interruption or savings loss into one premium. It is designed to remove the administrative burden of buying multiple policies, appeal to small and medium commercial installations, and provide a quick, standardized quote. The tradeoff is reduced flexibility in coverage limits, deductibles, and scope.

Think of it as a financial product model: insurers offer it as a simpler alternative to building your own "stack" of fire, industrial all risks (IAR), machinery breakdown, and other separate policies. This approach works well for straightforward installations with standard risk profiles, but can be restrictive for complex or high-value projects.

What Solar PV All Risk Typically Covers

Coverage varies by insurer and policy wording, but Solar PV All Risk products in Malaysia generally include:

• Fire and explosion damage to the solar array, inverters, wiring, and balance-of-system equipment
• Lightning strikes and surge damage
• Theft and malicious damage including cable and inverter theft (common in Malaysia)
• Accidental damage, such as impact from falling objects, vehicle collision, or weather events like hail
• Business interruption or savings loss, paid as either indemnity (actual revenue lost) or indemnity period (fixed benefit per day down)
• Public liability, offered as an optional add-on in some products

The exact list and scope depend on your insurer's wording. Always request a detailed schedule of what is and is not covered before committing.

What Solar PV All Risk Typically Does NOT Cover

This section lists the most important exclusions and gaps found in typical Solar PV All Risk products.

Gradual Degradation and Wear and Tear

Solar panels naturally degrade at 0.5–0.8% per year due to exposure to UV, moisture, and thermal cycling. Insurance does not cover this normal wear and tear. Only sudden, accidental damage or a defined peril (like a storm) triggers a claim.

Cosmetic or Minor Damage

Small cracks, discoloration, or partial delamination of panels are not covered unless they meet the policy's definition of "accidental damage" or "sudden, unforeseen event." Many insurers exclude cosmetic claims entirely.

Machinery Breakdown in Inverters

This is the most critical gap in many Solar PV All Risk policies. Inverters are the second most expensive component after the solar array, and they have a lifespan of 5–10 years compared to 25–30 years for panels. Inverter failure is the #1 cause of unplanned downtime on solar installations. A standard Solar PV All Risk policy may not cover internal mechanical or electrical failure of inverters unless it explicitly includes machinery breakdown coverage. Some policies offer broad "accidental damage" wording that could apply, but this varies by insurer and is often subject to strict conditions. Always confirm inverter breakdown coverage in writing with your insurer before purchasing.

Consequential Loss Beyond Policy Limits

If your policy includes business interruption but the indemnity period is too short or the daily benefit too low, you bear the excess loss. The policy will not cover revenue lost beyond the stated limit, even if the physical damage was covered.

Damage to the Building Itself

Solar PV All Risk covers only the solar equipment. If a fire starts in the inverter room and spreads to the roof or main building structure, the building damage is not covered under the solar policy; it falls to the building owner's fire and IAR policy. Coordination between policies is essential.

Third-Party Liability

Injury to workers, passersby, or damage to neighboring properties caused by your solar installation is not covered unless you add a public or employer's liability option. Many Solar PV All Risk products offer this as an optional add-on.

Supply Chain Damage (Scope 2 and 3)

If your solar system fails and this causes downstream customers to suffer loss, your Solar PV All Risk does not cover their claims. You would need professional indemnity or product liability insurance, which is separate from property or machinery insurance.

Solar PV All Risk vs Building Your Own Coverage Stack

Instead of buying a packaged Solar PV All Risk policy, many larger or project-financed solar installations use a "bespoke stack" of separate policies: fire, industrial all risks (IAR), machinery breakdown (MB), and other coverages as needed.

The advantage of a bespoke stack is control: you set the coverage limits, deductibles, indemnity periods, and scope to match your exact risk profile. The disadvantage is cost, administrative overhead, and the need for expert guidance. A packaged Solar PV All Risk product simplifies the process and is faster to arrange, but offers less tailoring.

The table below compares these two approaches across key dimensions:

Comparison Table: Typical Coverage Gaps by Product Type

The table below compares typical coverage elements across packaged Solar PV All Risk and common ancillary products. Note that specific coverage varies by insurer and policy wording; always review your policy for definitive terms.

* Varies by insurer; check your wording to confirm inverter breakdown is covered. Many Solar PV All Risk policies do not explicitly include machinery breakdown for inverters.

When Solar PV All Risk Is Enough

A packaged Solar PV All Risk policy is typically adequate if you meet all of these criteria:

• Your installation is small to medium (under 100 kW or so)
• It is a straightforward rooftop array with no complex electrical or control systems
• You own the building and can coordinate with your building's fire and IAR insurance to avoid gaps at the boundary
• Revenue impact from downtime is manageable; you do not depend entirely on solar revenue
• Your inverter is less than 5 years old and you have a maintenance contract covering replacement labor
• You are comfortable with the fixed deductibles and indemnity limits offered by the packaged product
• You do not need public or employer liability coverage beyond what the policy offers

When You Need More Than Solar PV All Risk

Consider adding separate policies or upgrading to a bespoke coverage stack if:

• Your installation is large (over 500 kW) or project-financed with debt requirements
• You need explicit, high-limit machinery breakdown coverage for inverters
• Revenue from solar is a material part of your business income and downtime would be financially damaging
• You are a third-party solar service provider or installer with liability exposure
• Your inverter is older (over 5 years) and replacement is likely soon
• You lease the roof or building and have third-party liability exposure to the building owner
• Your packaged policy excludes specific items you need covered, such as battery storage systems or advanced monitoring equipment

In these scenarios, separate machinery breakdown, electronic equipment, and specialized solar insurance policies may provide better value and certainty.

Solar PV Insurance Products Available in Malaysia

Several insurers offer branded Solar PV All Risk or specialized solar products in Malaysia. Below is an overview of the main market offerings as of April 2026.

MSIG Solar PV All Risks

MSIG offers one of the most widely recognized Solar PV All Risk products in Malaysia. The policy typically covers fire, explosion, theft, malicious damage, accidental damage, and optional business interruption or savings loss. MSIG allows optional add-ons for public liability. Inverter coverage varies by wording; confirm machinery breakdown for inverters with your agent before purchase.

Allianz SolarPro

Allianz SolarPro, distributed via Anora Agency, is another established Solar PV All Risk product in the Malaysia market. A distinguishing feature is its use of non-cash indemnity, meaning in some claim scenarios Allianz may arrange and pay the service provider directly (e.g., to replace an inverter) rather than paying cash to you. This reduces claims friction but requires coordination with your chosen supplier. Coverage includes fire, accidental damage, and optional BI.

Hong Leong Bank Solar PV All Risk (MSIG-Underwritten)

Hong Leong Bank offers a Solar PV All Risk product through bancassurance, underwritten by MSIG. This option is convenient if you bank with Hong Leong and want a streamlined application process. Coverage terms are similar to MSIG's standalone product. Bank branch staff can help with quotation and policy administration.

Etiqa Solar Energy Shortfall Insurance (SESI)

Etiqa SESI is a parametric insurance product, not a traditional all-risk policy. Instead of paying based on damage assessment, SESI pays a fixed benefit if solar irradiance levels fall below a threshold for a specified period (e.g., if daily irradiance is 50% below normal for 5+ consecutive days). It compensates for revenue loss due to poor weather and dust, not physical damage. SESI is the first parametric solar product in Malaysia and complements, rather than replaces, a traditional Solar PV All Risk policy.

The table below summarizes the key characteristics of these products:

* Product name and distributor based on bancassurance arrangements as of April 2026; verify current status with Hong Leong Bank.

Solar PV All Risk: When Packaged is Better, When Bespoke Wins

Your choice between a packaged Solar PV All Risk product and a bespoke coverage stack depends on the size, complexity, and financial significance of your installation. The decision tree below outlines the key factors:

Frequently Asked Questions on Solar PV All Risk

Does Solar PV All Risk cover inverter failure?

This varies by insurer and policy wording. Most Solar PV All Risk products cover accidental damage to inverters (e.g., from lightning or impact), but not internal mechanical or electrical failure. Some insurers include a machinery breakdown extension; others do not. Always ask your insurer in writing: "Is mechanical or electrical failure of the inverter covered under this policy without requiring accidental damage to have occurred?" If the answer is vague or no, consider a separate machinery breakdown endorsement.

What is the difference between Solar PV All Risk and a machinery breakdown policy?

Solar PV All Risk is event-based: it covers damage caused by a named peril (fire, theft, storm, accidental impact). Machinery breakdown covers the cost of repairing or replacing equipment that fails due to internal mechanical or electrical breakdown, regardless of external cause. For a solar installation, machinery breakdown specifically addresses inverter failure, which is the leading cause of unplanned downtime but may not be covered under a standard all-risk policy. The two policies complement each other.

Is business interruption included in Solar PV All Risk?

Many Solar PV All Risk products offer business interruption or loss of savings/revenue as an optional add-on, not as standard. Some insurers include a limited BI coverage (e.g., up to 30 days) as part of the base package. Always confirm the BI terms, indemnity period, and daily benefit limit before purchase. For installations where lost revenue is significant, a separate, custom business interruption policy with a longer indemnity period may be necessary.

Can I use a Solar PV All Risk policy if I lease the roof?

Yes, but with caveats. You will need to clarify liability and ownership boundaries with the building owner's insurer. Typically, the building owner's fire and IAR insurance covers the roof structure and building; your Solar PV All Risk covers only the solar equipment. Coordinate wording carefully to avoid gaps at the boundary (e.g., if an inverter fire damages the roof, who pays?). You may also need to add third-party liability or landlord's legal liability coverage to your solar policy.

What is parametric solar insurance like Etiqa SESI, and do I need it?

Parametric insurance pays a fixed benefit based on an index or measurement, not on actual damage. Etiqa SESI, for example, pays if solar irradiance falls below a certain level for a specified period, regardless of why (dust, clouds, pollution). This covers revenue loss due to weather and environmental conditions, which a traditional all-risk policy does not. Parametric solar insurance is useful if you want protection against extended poor weather or dust storms affecting generation, especially in regions with seasonal monsoons or high dust. It is a complement to, not a replacement for, a traditional all-risk or machinery breakdown policy.

Conclusion: Building the Right Solar Insurance Stack for Your Installation

A packaged Solar PV All Risk policy is a practical, cost-effective solution for small to medium solar installations in Malaysia. It bundles the most common perils—fire, theft, accidental damage—and often includes optional business interruption, all under one premium and one insurer.

However, Solar PV All Risk policies have significant gaps, most critically inverter machinery breakdown coverage. For many owners, the most valuable enhancement is a separate machinery breakdown rider or policy to cover inverter failure, which is both the most likely peril and the most expensive to fix.

Larger installations, project-financed systems, or owners whose solar revenue is critical should consider a bespoke coverage stack (fire, IAR, MB) for greater control over limits and indemnity terms. Third-party service providers should add professional liability and public liability coverage.

The key is to understand your installation size, revenue exposure, and risk tolerance, then match them to the right insurance product. Review your policy wording carefully, coordinate with any building owner's insurance if you lease the roof, and confirm inverter coverage in writing. A few minutes of clarity now can prevent a claim denial later.

To compare packaged products in the Malaysia market or discuss whether your installation needs additional machinery breakdown, business interruption, or parametric coverage, start with Foundation's comprehensive solar insurance guide, or reach out to discuss your specific needs. We can help you navigate the available products and design a coverage stack that fits your project.

For detailed guidance on machinery breakdown insurance for solar and renewable energy systems, see our article Machinery Breakdown Insurance for Solar and Renewable Energy in Malaysia. For building owners installing rooftop solar, see Rooftop Solar Insurance: A Factory and Building Owner's Guide.

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