Can Solar Panels Influence Homeowner’s Insurance?

Homeowners looking to prioritize sustainability and reduce their carbon footprint might consider the benefits of solar panels. The primary concerns revolve around their upfront costs versus long-term energy savings. Secondarily, it’s important to consider insurance needs in terms of where they will be installed on your property.

With a rooftop energy system costing around $25,000 up front, the adoption of solar panels has increased nearly 70 percent over the past decade. Yet weather can damage solar panels and, without sufficient insurance coverage, you may not receive the expected return on investment. Here’s what you should consider before making this modification to your home.

Solar Panel Location

The location on your property is the most significant factor in determining if homeowner’s insurance will extend coverage for solar panels. In general, if they are mounted directly to the roof, your policy considers the panels to be part of your home and extends the benefits of dwelling coverage. If the panels become damaged by a covered peril, dwelling coverage can assist with repairing or replacing them.

Based on your policy and where you’re located, coverage may exclude wind and hail damage. Check your policy limits and perils before installing roof-mounted solar panels.

Solar panels that are ground-mounted or added to a carport or shed won’t always be covered. Instead:

• Other structures from your homeowner’s policy may extend a limited amount of coverage but will likely exclude wear-and-tear, wind, earthquake and hail damage.
• You may need to purchase a rider or policy add-on to ensure these fixtures are fully covered.
• For more comprehensive coverage, you may need to take out a separate policy.

Limits and Perils

For roof-mounted solar panels, expect your premiums to increase due to their vulnerability to wind, hail and lightning. To account for this on a seasonal basis, it’s recommended to increase your coverage limit to factor in the full replacement cost.

Also think about which weather events your region sees or your home could experience. Your policy will likely extend coverage for damage related to fire or hail and may include wind. However, flooding and earthquakes are excluded. Should your region have a higher risk for these perils, it’s recommended you take out secondary coverage to anticipate potential damage.

Claim Limits

If you’re using other structures for a carport-mounted set of solar panels, understand how much reimbursement you will receive. Without a rider or separate insurance coverage, your homeowner’s policy provides up to 10 percent of the dwelling maximum. This factor considers all outside structures on your property.

Other Factors

Along with all the considerations above:

• Think about how the solar panels will be installed. If contractors damage your roof in the process of mounting the solar panels, your homeowner’s policy may not pay out to cover the claim.
• Leasing solar panels can complicate coverage. In some cases, the company owning the panels will extend coverage or they may expect you to purchase insurance.
• Always notify your carrier ahead of time. Keep them updated in the event extreme weather hits your region.

Are you thinking about installing solar panels on your home? Contact your HUB agent to discuss coverage options today.