Will Adding Solar Affect My Homeowners Insurance?

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This ensures that this costly investment is fully protected.

Important points

• Solar panels are unlikely to have a direct impact on homeowners’ insurance premiums.
• But homeowners should reconsider their policy limits to ensure they can afford to replace their solar panels in the event of damage.

Installing solar panels is a great way for homeowners to go green and save a little money on their monthly energy bills, but it also comes with some challenges. First, there’s the high upfront cost, which can easily cost a homeowner anywhere from $15,000 to $25,000, according to the Center for Sustainable Energy.

Then there’s the problem of protecting that investment once it’s made. Here’s a look at home insurance coverage quotes for solar panels.

Home contents insurance usually covers solar panels

A standard homeowners insurance policy covers roof-mounted solar panels as part of the policy’s home coverage. If the solar panels are on the ground or on the roof of a shed or detached garage, they are covered by the policy’s other buildings coverage. Both pay something to replace solar panels, but covering residential buildings offers much greater protection.

Home insurers pay up to the limit of the policy to repair damage to the home themselves. However, other structures on the property do not receive the same level of protection. There is usually a cap – often around 10% of the home’s coverage – on how much the insurer will pay to repair these structures. For example, if the home is insured for $200,000, other structures on the property are only insured up to $20,000. This may not always be enough to replace the entire array of solar panels if necessary.

Another important caveat is that insurers only cover solar panels if they are damaged by an insured peril. Issues like flood and earthquake damage are not covered by standard homeowners insurance. Homeowners are liable for repairs in these situations unless they have flood or earthquake insurance.

Some homeowners insurance providers also do not cover solar panels damaged by wind or hail. Or they can require the homeowner to pay a separate — and higher — deductible before paying anything for wind or hail damage. This is particularly common in areas with large hail events and severe storms.

This ensures that solar panels are fully protected

Homeowners considering installing solar panels should first check their existing coverage to see if there are any significant gaps. For example, if you are concerned about possible hail damage and your policy includes a hail damage exclusion for solar panels, you might want to look at a policy that offers hail protection.

They may also want to increase their homeowner policy limit. Adding solar panels increases the value of the home as well as the cost of rebuilding if the home is destroyed by fire or storm. If homeowners don’t want to pay the difference themselves, they should speak to their insurer about additional coverage.

Individuals leasing their solar panels may not need to purchase additional coverage for their solar panels as some leasing companies will provide their own insurance for the solar panels. It’s best for homeowners to check with the company they work with before making any changes to their policy.

It’s ultimately up to the homeowner to decide if solar panels are worth the extra expense, but remember they can offer excellent long-term savings that can help offset the cost of those higher insurance premiums.