A Michigan appellate court recently addressed what coverage, if any, was available under a general liability insurance policy for damage caused by the improper installation of rooftop solar panels. Mid-Michigan Solar LLC ("MMS") was contracted to install photovoltaic solar power systems at a customer's property. Shortly after installation, problems arose, including a solar panel array shifting out of place. The problems were attributed to faulty installation on the part of MMS. After MMS settled an action against it for approximately $1 million, its insurer, Employers Mutual Casualty Company ("EMC"), denied that it had an obligation to defend or indemnify for losses that were limited to problems with the solar equipment that MMS installed.
In upholding the trial court's grant of summary judgment in favor of EMC, the Michigan Court of Appeals agreed that the damage was not covered within the limitations of the policy and, accordingly, that there was no duty on the part of EMC to defend or indemnify MMS. The court held that "when the damage arising out of [MMS'] defective workmanship is confined to [MMS'] own work product, [MMS] is the injured party, and the damage cannot be viewed as accidental within the meaning of the standard liability policy." Furthermore, the court found that "damage resulting from negligence or breach of warranty would constitute an occurrence triggering the policy's liability coverage only if the damage in question extended beyond [MMS'] work product."
With the increasing use of rooftop solar across the country, issues arising from faulty installation will likely remain a concern for developers, manufacturers, contractors and property owners who contract for installation either through a lease or direct ownership. As this case demonstrates, all parties should take care to understand the scope of insurance coverage on work being contemplated.
The case is Employers Mutual Casualty Co. v. Mid-Michigan Solar, LLC, Case No. 325082, Michigan Court of Appeals.
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