Allianz has gone to court, arguing it owes nothing on excess umbrella policies over alleged widespread solar tracking system failures.
Allianz Global Risks US Insurance Company filed a declaratory judgment action on April 6, 2026 in the US District Court for the Southern District of New York against Terrasmart, Inc., formerly known as RBI Solar, Inc. The filing asks the court to rule that Allianz has no duty to defend, indemnify, or contribute to any settlement tied to a sprawling dispute over allegedly defective solar tracking systems.
The action stems from an underlying lawsuit filed by Cypress Creek EPC, LLC and related entities in California state court. That case accuses Terrasmart of designing, engineering, manufacturing, and delivering tracking systems that suffered from widespread failures - including helixing, misalignment, component failures, and reduced productivity - across more than twenty solar facilities in multiple states. The systems were supplied between approximately 2017 and 2018 under 25 purchase orders and multiple master supply agreements.
Terrasmart claims insured status under three Allianz commercial umbrella liability policies issued to Gibraltar Industries, Inc., each carrying $25 million in per occurrence and aggregate limits. Those policies sit above primary coverage issued by Arch Insurance Company. According to the court filing, Terrasmart demanded that Allianz immediately contribute millions of dollars toward a proposed settlement of the underlying case. Allianz declined.
The filing lays out five grounds for why Allianz says it owes nothing.
First, Allianz argues its policies have not attached because the underlying insurance has not been exhausted by actual payment - a condition the policies require before excess coverage kicks in. The policies, according to the filing, expressly reject any notion of "functional," "implied," "constructive," or "deemed" exhaustion.
Second, Allianz says Terrasmart cannot settle the case and then send the bill. The policies require Allianz's prior written consent before any settlement, and no such consent was given.
Third, the filing raises a notice problem. It alleges that Terrasmart knew about the alleged defects as early as mid-2019 and that Cypress Creek explicitly asked Terrasmart in a March 2020 letter to notify its insurers. Terrasmart's response, according to the filing, was blunt: it "will not be contacting our insurance company." Allianz says it did not hear about the claims until December 2022 - more than two and a half years later.
Fourth, Allianz points to a professional liability exclusion in the umbrella policies, which states that coverage does not apply to liability arising out of any "act, error, omission, malpractice or mistake of a professional nature." The filing notes that Terrasmart had separately purchased professional liability coverage through Lloyd's underwriters for exactly these types of risks, but that coverage was denied due to late notice and prior-knowledge issues.
Fifth, Allianz contends the alleged damages - defective design, diminished performance, repair costs, and unmet specifications - are classic business risks, not the kind of accidental occurrence that liability insurance is designed to cover.
No determination has been made on the merits. Terrasmart's counsel has not been identified in the filing.
Case: Allianz Global Risks US Insurance Company v. Terrasmart, Inc. f/k/a RBI Solar, Inc., Case No. 26-cv-02806 (S.D.N.Y.)
