Understanding home insurance with solar panels
Home insurance, also known as homeowners insurance or property insurance, is a type of insurance policy that provides financial protection for your home and its contents. Unexpected events leading to property damage, destruction, or loss are typically covered in your home insurance policy
As residential solar panels become more common, more insurance companies are specifying coverage in their policies. However, the type of insurance coverage for solar panels varies from company to company. It’s important to find out the type of coverage you can get for your solar panels and how they will affect your premium before installing solar panels. Read on to learn how solar panels may impact your home insurance in the U.S.
Insurance coverage types
Home insurance typically consists of two main coverage types: property and liability coverage.
- Property coverage: This home insurance type protects the physical structure of your home, including the walls, roof, floors, and any attached structures like garages or sheds. It also covers your personal belongings within your home, such as furniture, electronics, appliances, and clothing. In the event of damage or loss of property, the insurance will provide funds to repair or rebuild your home and replace or reimburse you for damaged or stolen belongings up to the policy limits.
- Liability coverage: This aspect of home insurance protects you from legal and financial responsibility if someone gets injured on your property and decides to sue you. It can cover medical expenses, legal fees, and damages awarded in a lawsuit.
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Home insurance coverage of solar panels
Homeowners insurance typically provides coverage for solar panels, but the extent of coverage depends on where they are installed on your property. Check with your insurance provider for specific details on coverage.
- The panels attached to the roof are usually protected under the policy’s dwelling coverage. If your panels are damaged out of your control, the insurer will pay for repair or replacement costs up to the policy’s full value in the event of covered damage.
- If solar panels are ground-mounted or attached to a garage, they are generally covered under the policy’s other structures coverage.
How solar panels can affect home insurance
Solar panels may impact home insurance policies. The increase in your home insurance premium will be based on the cost of replacing solar panels in case of damage from natural disasters or fires. While the exact impact can vary depending on the insurance provider and policy, here are some key factors to consider:
- Increased dwelling coverage: When you install solar panels on your home, they are considered an integral part of the dwelling. Consequently, they can potentially raise the replacement cost of your home. Increasing the dwelling coverage limit on your insurance policy may be necessary to ensure that you have enough coverage. This adjustment could result in a higher premium as you get additional protection for your home’s increased value from solar panels.
- Insurance for leased solar panels: If you lease solar panels or use a power purchase agreement instead of purchasing them outright, it’s important to figure out how insurance will cover them. When leasing, ask your solar company about their insurance policies. Some solar companies will insure the panels themselves, however, others may require you to add the panels to your existing home insurance policy or purchase separate solar panel insurance offered by the company.
- Additional coverage for solar panels: Some insurance providers offer specific coverage for solar panels, either as an endorsement or as a separate policy. This coverage offers additional protection against damage or loss to the panels, for example, from hail, fire, or theft.
- Liability coverage: Solar panels can also impact liability coverage. If someone is injured due to a solar panel-related incident, like a panel falling and causing harm, liability coverage may be involved. Reviewing your policy to ensure you have sufficient liability coverage for potential solar panel-related risks is important.
- Maintenance and warranties: Insurance providers may inquire about the maintenance and warranties associated with your solar panels. Regular maintenance, inspections, and adherence to manufacturer warranties can help demonstrate responsible ownership and may be factors considered by insurance companies.
Common insurance exclusions or limitations related to solar panels
While most home insurance companies provide coverage for solar panels, it is important to note that specific exclusions may apply. For example, homeowners may face difficulties getting coverage for solar panels due to exclusions related to wind and hail damage. These exclusions are more common in areas vulnerable to severe windstorms and hail.
Some insurance companies may mandate a separate wind and hail deductible, usually higher than the standard deductible, before covering claims related to these risks. Other companies may completely exclude wind and hail damage coverage on solar panels. But they could still cover other claims, such as damages from a house fire. Discuss all aspects of covering your solar panels with your insurance agent before installing them.
Steps to ensure proper insurance coverage of solar panels
To ensure proper insurance coverage for your solar panels, follow these steps:
- Check your existing home insurance policy: Start by carefully reviewing your current home insurance policy to determine if it already includes coverage for solar panels. Read through any specific terms, conditions, or exclusions related to solar panel coverage.
- Contact your insurance provider: Inform your insurance provider about your solar panel installation. Inquire about the coverage details and any additional requirements or adjustments to ensure adequate protection.
- Assess the value of your solar panels: Determine the current value of your solar panels, including the cost of installation, equipment, and any related components. This information will help you determine the appropriate coverage amount for your insurance policy.
- Consider additional coverage options: Depending on your insurance provider, you can add specific coverage for solar panels. Ask them about any available endorsements, riders, or add-ons to enhance your coverage for solar panels.
- Find out about possible exclusions: Ask your insurance provider about any policy exclusions related to solar panels. Some companies may not cover damages caused by natural disasters, wear and tear, or malfunctions.
- Update your insurance policy as needed: If you make any changes to your solar panel system, like adding more panels or upgrading equipment, inform your insurance provider and update your policy accordingly. Failure to update your policy may result in insufficient coverage.
- Compare insurance options: If your current insurance policy doesn’t provide enough coverage for your solar panels or you are unsatisfied with the terms, consider shopping around for other insurance providers. Compare their coverage options and customer reviews to choose the best fit for your needs.
Factors affecting home insurance premiums
Several factors can impact the cost of home insurance premiums depending on your location and the specific insurance provider. Insurance companies consider the following major factors when determining the price of your policy:
- Location: The location of your home plays a significant role in determining your insurance premium. Factors such as crime rates in the area, the likelihood of natural disasters (like floods, hurricanes, or earthquakes), and the availability of local services can affect your premium.
- Dwelling characteristics: The characteristics of your home, like its age, size, construction materials, and overall condition, can impact the premium. Older homes or those made of materials prone to damage (for example, wood) may have higher premiums compared to newer or more durable structures.
- Coverage limits and deductibles: The amount of coverage you choose for your property and personal belongings and the deductible you select can affect your premium.
- Safety features: Security systems, smoke detectors, fire alarms, sprinkler systems, and deadbolt locks can result in lower premiums. These features reduce the risk of theft, fire, and other potential damages.
- Insurance provider: Each insurance company has its own underwriting guidelines and pricing models. Premiums can vary between providers, so comparing quotes from multiple companies is advisable to find the best coverage at a competitive price.