Are Solar Panels Covered By Home Insurance?
For many homeowners, the initial worry about solar panels isn’t the cost – after all, they can save you hundreds on electricity bills. The real concern is whether your home insurance will protect your solar investment in the long run…
Because the last thing you want is to find yourself asking, “Are my solar panels covered?”, when damage has already been done.
The good news is, most home insurance policies do cover solar panels. But, like with anything, there are details to consider, such as extra costs, exclusions, and possible claim denials. Keep reading as we tackle all of these to help you understand what to expect.
Are solar panels covered by home insurance?
Yes, solar panels can be covered by your home insurance policy. As more homeowners turn to solar energy – especially with electricity rate hikes – insurance companies have made it easier to update their existing policies to include solar coverage.
If your solar panels are permanently mounted on your roof, they’ll be covered under the “Dwelling Coverage” section of your policy.
For ground-mounted solar panels, they will fall under the “Other Structures” category instead, which also covers detached structures like garages or fences.
Keep this distinction in mind as each type of coverage can impact your premium differently.
Will installing solar panels increase my homeowners insurance premium?
Installing solar panels can increase your home insurance premium, but it’s not always the case. In fact, many homeowners have added solar panels without seeing an increase in their premiums. So, what’s the real story?
Here’s an example to show you how this works:
Say, you want to add a $35,000 solar system to your roof. If your house is insured for $300,000, but the actual replacement cost is only $250,000, there’s $50,000 in unused coverage – more than enough to cover your solar panel. In this case, your premium may not increase at all.
However, if the insured value of your home isn’t high enough to cover both your house and the solar panels (for example, you have $250,000 in coverage but need $285,000), your insurer may increase the insured value, which would likely raise your premium.
For ground-mounted solar panels, the situation is a bit different.
Since these panels are separate from the house, they fall under the “Other Structures” category, which usually has a claim limit of 10% of your home’s insured value.
For example, if your home is insured for $300,000, the maximum coverage for secondary structures would be $30,000 – less than the $35,000 cost of your solar panels. In this case, you can request your insurance company to increase the coverage for “Other Structures”.
If that’s not an option, you’ll have to add a rider or endorsement specifically for you solar panels to ensure full coverage. Either way, this will likely raise your premium.
What types of solar panel damage are typically covered by homeowners insurance?
Homeowners insurance may cover solar panel damage caused by storms, wind, hail, or falling trees. But note – this coverage can vary based on where you live and the insurance company itself.
For example, in hurricane-prone areas, some policies may exclude coverage for solar panels during these types of events.
To be sure, ask your insurer about any exclusions and whether add-ons are available to cover these situations.
Are there specific exclusions in homeowners insurance policies regarding solar panel coverage?
As mentioned earlier, standard homeowners insurance policies may not cover solar panels in the event of uncontrollable events like floods, earthquakes, or hurricanes.
Moreover, damage that occurs during the installation process, such as roof penetrations, may not be covered by your policy.
However, if you’re working with a reputable solar installer, this typically won’t be an issue. Many qualified installers offer solar panel warranties that can cover any damage during installation.
Do I need to inform my insurance company if I install solar panels?
Yes, you should inform your insurance company before installing your solar panels. This gives them time to review your policy and make any necessary updates.
This also allows them to explain to you what types of damage are covered and if you need any additional protection.
Otherwise, you might face any of these consequences:
- Your solar panels might not be covered under your policy. If they’re damaged, stolen, or destroyed, you could end up paying for repairs or replacement yourself.
- You’ll likely end up underinsured if your home suffers a total loss.
- There could be legal consequences on the basis of non-disclosure. Understand that adding solar panels changes your home’s risk level, and not reporting this can give your insurer a reason to deny a claim, or worse, cancel your policy.
What should I do if my current policy doesn’t cover solar panels?
Home insurance companies may sometimes refuse to cover your solar panels, especially if they view them as a higher risk. This is often the case in areas with severe weather conditions.
If this happens, you have three options:
- Add an endorsement to your existing policy
Your insurer may offer riders or endorsements to extend coverage specifically for your solar panels. This is often the most cost-effective option.
- Switch to a different insurance provider
If you find a new insurance provider that covers solar panels, you can replace your current policy with that instead. However, be ready as cancellation fees may apply to your existing policy.
- Purchase a standalone solar panel insurance policy
A standalone solar panel insurance policy is separate from your home insurance and can be offered by either your current provider or a different company. This means you’ll be paying two premiums — one for your home insurance and one for your solar coverage.
What is the process for filing a claim due to solar panel damage or theft?
Filing a claim for solar panel damage or theft is similar to filing any other home insurance claim. Here’s what you can expect:
- Contact your insurer as soon as possible. They will walk you through the claims process and let you know what information they need from you.
- Provide the required documentation. You’ll need to submit details about the incident, photos or videos of the damage, a description of your solar system, a police report (if it’s a theft), and your policy number.
- File the claim. You can file your claim online, by phone, or through your insurer’s app (if available). Once submitted, an adjuster or claims specialist will be assigned to evaluate the damage and verify the details.
- Wait for approval. If your claim is approved, the insurance company will provide a payout to cover the cost of repairs or replacement. They may issue the payment directly to you or to the contractor handling the work.
If your claim is denied, the insurer will explain the reasons. This happens often due to specific coverage exclusions in your policy.
Remember, depending on your policy, you may need to pay a deductible, which is an amount you must pay out of pocket before the insurance coverage applies.
How can I ensure that my coverage limits are sufficient to protect my solar investment?
First, determine the full value of your solar panels and installation, including the cost of the panels, inverters, wiring, racking, and any other components.
While you can calculate this on your own, you may also ask your solar installer for an official invoice or appraisal that lists the total system cost.
Next, check if your current coverage limits are enough to cover your solar system. If not, reach out to your insurance company and request an increase in coverage.
If I lease my solar panels, who is responsible for insuring them – me or the leasing company?
If you’re leasing your solar panels, or have a Power Purchase Agreement (PPA) in place, the leasing company is usually responsible for insuring the system since they technically own it.
However, it’s always a good idea to check with your leasing company to confirm if you have any responsibility for additional coverage.
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