Are Solar Panels Covered By Homeowners Insurance?
Find out how to protect your energy-saving investment with a homeowners insurance policy for your solar panel system.
Does homeowners insurance cover solar panels?
When it comes to adding solar panels — otherwise known as photovoltaic (PV) systems — to your roof, most insurance companies see them as part of the structure of your home. That's good news because it means a regular homeowners policy usually has you covered, and you won't need to get special insurance just for your solar panels. But, it's important to do a little homework to make sure you've got the right level of protection. Below, we’ll cover the process of getting the right insurance coverage for your solar panel system and address common concerns about this investment in renewable energy.
How much coverage should I have if my home has solar panels?
How much homeowners coverage you need isn't a universal number — but because your home is one of the biggest investments you'll make, it's good to have as much coverage as you can reasonably afford.
Your coverage is more than simply the rebuilding cost of the house itself. The different areas of your policy include the following:
- Dwelling
- Other structures
- Personal property
- Loss of use
- Personal liability
- Medical payments
If you plan to boost your home's value with some big improvements, like installing solar panels, remember this will likely increase the cost of replacing your home. This means you'll want to evaluate your current coverage limits and consider increasing that number. If 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. Raising your coverage limits is a good idea and can be done for a relatively low premium increase.
How much do solar panels cost?
According to the Solar Energy Industries Association (SEIA), the average cost for a residential PV system has dropped by about 47% over the last ten years, making it more popular and attainable for homeowners. The average residential home can have a solar energy system installed for around $25,000 (compared to $40,000 back in 2010).[1]Â Even with these drastic cost reductions, a solar panel system is a major investment and will affect your insurance premium.
Do I need a separate policy or endorsement 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. We suggest you consult your insurance agent or company to decide on the best course of action in these circumstances.
Leased vs. owned solar panels
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.
Inform your insurer about major changes
We purchase insurance to have peace of mind that damage will be financially covered if something unexpected happens to our home. To avoid unpleasant surprises, like denial of a claim or insufficient coverage, it's important to communicate with your insurance company when you make major changes or remodel your home. They can fill you in on all the details about how these changes or additions fit into your current policy. They'll also let you know if there are any specific perils, like storm damage, that might not be covered. Getting the scoop directly from them can help you feel more secure about your decision and ensure you're not missing any key information.
Here are some examples of updates to a home that could require a change to your coverage:
- Installing a pool
- Adding square footage
- Replacing key components (like a roof)
- Finishing a basement
- Building an additional structure
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