Are Solar Panels Covered By Homeowners Insurance?

Solar panels and home insurance

It goes without saying that solar panels are a great option for the eco-minded, but solar panel systems — otherwise known as photovoltaic (PV) systems — also allow you to save money on your electricity bill and can increase the value of your home. However, before you decide to cover your rooftop with panels, you’ll want to make sure that your current homeowners policy will cover them.

Below, we’ll cover the process of getting the right insurance coverage for your solar panel system as well as some of the best options for using renewable energy in your home.

 

Solar panel insurance basics — table of contents:

• Does homeowners insurance cover solar panels?
• Do I need a separate insurance policy for solar panels?
• How much does solar panel insurance cost? 
• Do I have to insure a leased solar panel system?
• What states are best for installing solar panels?
• Solar panel insurance considerations

 

---

 

Does homeowners insurance cover solar panels?

In most cases, homeowners insurance providers consider rooftop-mounted solar panels permanent attachments to the structure of your home. This means most homeowners policies will provide coverage and that you will not need a separate solar panel insurance policy. However, it’s vital to do some research before installation to ensure you don’t have a gap in your insurance coverage.

Start by contacting your insurance company to see how it handles coverage for a solar panel system. The company can provide info on any potential exclusions or perils that may not be covered, such as wind or hail damage. This can help you better understand your current policy to decide on the right course of action.

 

Do I need a separate insurance policy for solar panels?

There are instances in which you may need an add-on to your coverage or — in some cases — an altogether separate policy for your solar panels. For instance, if your solar energy system is mounted in your yard rather than on your rooftop, you may require additional coverage, as it is not a part of your actual dwelling. It’s a similar story for a solar panel carport, an example of a freestanding structure that may require a rider or separate policy. It’s wise to consult your insurance agent or company to decide on the best course of action in these circumstances.

 

How much does solar panel insurance cost?

As rooftop-mounted PV systems are mostly considered to be permanent attachments, the cost to insure them is usually rolled into your dwelling coverage. What will likely change, however, is your overall coverage limit. In the event that your home is severely damaged, you’ll want to have a limit high enough to cover the cost of your dwelling as well as a new PV system. Because solar panel installation is not cheap, you may need to factor the replacement cost of this system into your coverage limit.

According to the Solar Energy Industries Association (SEIA), the average cost for a residential PV system has dropped from $40,000 in 2010 to around $18,000 today (though some can cost upward of $30,000). Even with these drastic reductions in cost, a solar panel system is a major investment that will have an effect on your insurance premiums. Raising your coverage limits is a good idea and can be done for a relatively low premium increase.

 

Dwelling Limit	Average Yearly Homeowners Premium
$200k	$1,180
$250k	$1,407

 

As you can see, bumping up your dwelling limit will increase your yearly premiums, but the added protection could potentially save you tens of thousands of dollars in the event you need to replace your entire system. See our Guide, The Average Cost of Home Insurance, for the typical cost of home insurance based on other factors.

 

Do I need to insure a leased solar panel system? 

For those interested in installing a solar panel system but who may not be in the financial position to do so, another option exists. Many companies offer leasing options that allow users to install a solar power system at little or no up-front cost. The important distinction is that you do not own the system. In most cases, this means that you are not required to insure a leased solar energy system or worry about upkeep. That responsibility lies with the leasing company that services the system. However, while you can still benefit from lower energy costs by leasing, you will not see the same savings as you might owning the solar power system outright.

 

What states are best for installing solar panels? 

It’s no surprise the states best suited for solar power are those receiving the most sunlight. Homeowners in Arizona, California, Colorado, Florida, Nevada, and Texas may be able to efficiently utilize solar energy. However, solar panels are becoming more popular in all 50 states, and some of the highest producers of solar power are states you may not expect, including Massachusetts and New Jersey.

It’s also important to note that individual states have different regulations and incentives for using solar energy, meaning benefits can vary greatly by location.

 

Solar panel insurance considerations

By design, solar panels are meant to be placed in highly exposed areas that are often vulnerable to the elements. This means that damage is a likely occurrence — especially if you live in an area prone to storms. As with any costly investment, solar energy systems should be properly protected. If you are worried about the extra costs that might accompany solar panel insurance, it might be time to look for a cheaper home insurance policy.

The Zebra can help you find a great homeowners policy by comparing rates from a number of top companies, helping you to zero in on the policy that’s right for you.

 

Sources:

• SEIA Research Data
• SEIA Top 10 Solar States