Frequently Asked Questions Regarding Solar Panels and Insurance
Most homeowners insurance policies cover your solar panels if attached to your home. But, as with a lot of insurance policies (they are contracts written by lawyers, after all), there are a lot of ifs and buts. Solar panels can be an great investments. They reduce your electricity bill and increase the value of your home. Since they are so expensive you need to make sure covered under your insurance.
I am a lawyer who has his own solar panels and who has extensive knowledge about insurance. I wanted to answer a frequently asked question of solar panel owners – “are my panels covered under my insurance?” I reviewed information from government reports, state insurance commissioners, and insurers themselves.
The good news is that most companies insure damage to or from solar panels. However – and this is a big however – some companies and states are not as generous.
According to the U.S. National Renewable Energy Laboratory, insurance for solar arrays has historically been bad because of the expensive nature of these systems. Now, since technology has advanced and the price of solar panel has gone down, more insurers cover solar risks.
Solar Panels Covered by Insurance?
What is a Covered Peril?
Covered Peril means the cause of the damage needs to be specifically listed in the policy. Generally covered perils are things like wind, hail, lightning, vandalism, broken tree limbs, fire and so on.
What Kinds of Perils Does Insurance Cover?
When a Covered Peril damages solar panels, insurance will cover them. If the solar panel causes damage to the roof when damaged by a covered peril, that damage generally is covered too. For example, if a solar panel is mounted to the roof and the mounting causes damage to the roof, that generally is covered.
What Kinds of Damage to Solar Panels Does Insurance Cover?
Insurance will cover damage to or from solar panels only if the damage stems from a Covered Peril.
All policies are different so you should either look at your policy or call your insurance agent or insurance company and specifically ask whether your system is covered.
Where Must My Solar Panels Be Located to be Covered by Homeowners Insurance?
Most insurers offer coverage to solar panels connected or installed on your home, usually the roof.
If the solar array connects to a separate structure, like a separate carport or barn, then most insurers will not cover all the damage to your solar panels. Some policies will exclude coverage altogether.
Many policies will have a set coverage limit for non-home structures, usually up to 10% of your house or primary structure’s value. So if your home is worth $150,000, your insurer may only cover a solar panel system on a separate carport for up to $15,000, less than what many systems cost. If this is the case, you will want to ask your insurance agent or insurance company about an endorsement to increase your coverage amount.
What Does Insurance Cover if my Solar System is Leased?
Generally, your insurance company will not cover a leased system. Insurance usually only covers what you own. You insurance should cover any other damage to your property which was connected to the solar panel system, like your roof.
However, the company you lease your system from should have insurance which covers their solar panel system. So when you lease the system, you should ask for proof the system is insured. If they will not give you proof then that is a big red flag.
Will Solar Panels Increase My Insurance Premiums?
Again, this depends on your insurance company. This is definitely something you want to check before you install the solar panels. Some companies will increase you premiums with the increase in value to the home. Other companies offer discounts or lower rates for homeowners who install a solar system.
Does My Insurance Cover Net-metering or Selling Solar Energy Back to the Grid?
Some utility companies will allow you to sell the energy you generate through your system back to the grid. According to the National Association of Insurance Commissioners, when that happens most local governments require or urge solar panel owners to maintain liability insurance. Those governments will also require that you are liable for any damage or harm to government employees or property.
Homeowners insurance usually has liability insurance included as part of your policy. You should check with your insurance agent or insurance company to ensure that is the case.
What About More Restrictive Insurance Policies?
There are companies that do not cover damage caused to solar panels if the damage was related to wind perils, hail damage, or hurricanes. Those are big holes left in the policies.
If you have one of those insurance companies then you should either start shopping around or make sure you save enough to cover any damage to your solar panels.
What Should You Do to See If Your Solar Panels Are Covered by Insurance?
If you got your insurance through an insurance agent, then you should check with them first. You should know that they legally are not your agent, but an agent of the insurance company. But, they cannot misrepresent the benefits of a policy to you. It is also in their interests to make sure you are fully informed about your insurance policy. They will be able to tell you whether your insurance policy covers solar panels.
If you didn’t get your policy through an agent, then call your insurance company and ask about your coverage for your specific solar panel system.
Then you should get an actual copy of your insurance policy and review it. The language is complicated but do a quick scan to make sure solar panels or arrays are not excluded in any way.
What If Your Insurance Policy Excludes or Does Not Fully Cover Your Solar Panel System?
If your policy excludes your system, then you need to change it. Contact an insurance agent and explain your situation. Remember to tell them everything you can about your panels. Things like how much your solar panel system costed, where it is located, whether you own it, and any other important information.
What If You Have Not Built Your System Yet?
If you are just looking to build one, then you can tell that to your agent and he or she can help pick out the best coverage for you.
An insurance agent will also be able to tell you if any insurance companies will offer discounts or benefits for installing a solar panel system.
If you already have an insurance policy and want to keep it, check with your insurance agent or insurance company to see if it will change your insurance premiums or be excluded.
Since solar panels will usually increase the value of your home, you will also want to increase the value of your insurance policy. This will likely come with a small insurance premium increase, but the coverage will be well worth it.
Additionally, a certified solar technician will be able to explain what insurance you should get. He or she will also be able to explain the liability and indemnification provisions required by your utility or local government.
You can offset the costs of insurance premiums by seeing if you qualify for any Solar Tax Credits.