The good news is that homeowners insurance usually covers solar panels if you own them and they’re permanently attached to your roof. In other instances – for example, if you lease your solar energy system or it’s attached to the ground or an external structure, like a shed – coverage may be limited or excluded from your main policy.
Even if your base home insurance policy excludes coverage for solar panels, you may still have coverage options in the form of a separate policy or an insurance endorsement.
Getting coverage for solar panels is really important because while they can reduce your energy bill significantly, sometimes to zero, they’re also a big investment. The average cost of a solar panel system for a typical home is nearly $21,000 after federal credits. And the Solar Energy Industries Association predicts 15% of all US homes will have a solar energy system by 2030.
Interested in using renewable energy at your home? Here’s what you need to know about how to insure your solar panel system.
How does home insurance cover solar panels?
A solar energy system that’s attached to your house and its equipment is generally considered a permanent attachment to your property, similar to a security system or a patio. In that situation, the cost of repairing or replacing damaged solar panels is typically covered by your dwelling coverage if the panels are permanently attached to your house.
If your solar panels are mounted on the ground or attached to an external structure, such as a detached garage or another structure, they may be covered by your other structures insurance – or they might not be covered at all. It all depends on the specifics of your coverage and your solar panel installation.
The best way to confirm if your solar panels are covered by your homeowners insurance is to review your policy with your insurance agent or contact your insurance company.
What types of damage are covered?
Depending on your policy, both dwelling and other structures insurance kick in for many of the perils that can affect your solar panels, including:
-
Hurricane.
-
Hail.
-
Lightning.
-
Explosion.
-
Weight of ice, snow, or sleet.
-
Impact by aircraft or land vehicle.
-
Vandalism.
-
Theft.
-
Falling trees.
-
Animal damage.
But depending on the place where you live and the exclusions listed on your policy, certain sources of damage to your solar panels may not be covered. For example, damage caused by earthquakes or vermin, birds, or insects is often excluded. Also, your homeowners insurance might exclude wind or hail damage if these risks are common in your area.
If your main homeowners policy doesn’t cover your solar panels at all, then you may need to add a rider or endorsement to your policy. Another option to protect your investment is to purchase a separate solar panel insurance policy.
Other coverage for solar panels
Home insurance covers much of the damage that can happen to your solar panels. But a solar panel system is such a major investment that you may also want to look into additional protection.
Liability coverage
The liability coverage in your homeowners insurance offers legal and financial protection for any property damage or injury that your solar panels may cause to others. For example, if a panel falls and damages your neighbor’s property, then your insurance company typically helps with your defense.
However, some utility companies require homeowners with solar panels to have a specific amount of liability coverage. They do this to protect themselves in case they face legal expenses after a customer’s net metering system malfunctions as it reroutes excess energy back towards the utility company grid. If the amount the utility requires exceeds what your home insurance company allows, then you may need personal umbrella insurance.
Equipment coverage
Homeowners insurance typically covers damage to your home, but it doesn’t pay to repair or replace equipment that malfunctions. For that, you need equipment breakdown coverage that protects the parts of your solar energy system, including panels or tiles and inverters, if they experience mechanical failure or electrical issues.
When should you purchase separate solar panel insurance?
Getting a standalone policy for your solar panels may make sense if your insurance company excludes them from your current coverage and doesn’t have an endorsement that covers the gap. This may also be true if your insurer provides only limited coverage for solar panels.
Keep in mind that some home insurance policies don’t cover damage caused by hail or wind – or may exclude it specifically for solar panels. So even if you think your main policy covers your solar energy system, it’s never a bad idea to confirm your coverage details with your insurance company.
Do you need insurance coverage if you lease solar panels?
The answer depends on the solar energy company you’re working with because they usually own the solar panels installed in your home.
If you have a lease or power purchase agreement, you may not have to cover the cost of insuring your solar panels – the energy company may cover that. But some companies may require you to provide your own coverage for the panels, either through your homeowners insurance or a separate policy.
Before you decide to lease a solar power system, be sure to check with the system provider to see who is responsible for insuring the system. Then talk to your insurance agent about coverage options to see if there are any exclusions in your policy for leased solar panels.
How solar panel installation affects your insurance premiums
Your home insurance premium and coverage amounts likely take your solar panels into account if they were installed before you bought your homeowners insurance.
Installing solar panels after your homeowners insurance is in place won’t automatically increase your premiums either. However, insurance premiums are partly based on the amount of coverage you need, and adding a solar energy system is a big change to that. So ultimately, solar panel installation will impact your home insurance premium because you’ll need to raise your coverage amounts to make sure you’re adequately insured.
Should you raise your coverage limits if you get solar panels?
You should consider raising your coverage limits when you get solar panels. This is because coverage limits are based partly on your home’s replacement cost estimate (RCE). When you install solar panels, your home’s RCE increases, which means you need higher coverage limits to be properly insured.
Long story short? The cost of replacing or repairing your solar panels can potentially be in the thousands of dollars, so you’ll want to make sure that your coverage limits account for any repair or replacement costs.
Preventing solar panel claims
Ideally, your solar panels will enjoy their full lifespan – usually 25 to 30 years – and effectively eliminate your energy bill. The best way to do that and prevent claims is to maintain your solar panels by:
-
Regular cleaning. Clean your panels to remove dust, debris, and bird droppings. Most dust can be removed by spraying the panels with a garden hose. For caked-on grime or droppings, you may need to wipe it down with a rag and water.
-
Clearing overhanging branches. You don’t want trees to obstruct the panel and hinder its ability to absorb sunlight. Not only will the shade make your system less efficient, but it makes it more likely that a branch could fall and damage your panels.
-
Inspecting your solar panels each year. Make sure your panels are properly attached to your roof – no loose screws or movement. Look for rodents or nests.
How to file a solar panel claim
If you have a solar panel loss, call your insurance company right away or submit your claim online.
You’ll typically want to document the damage with photos as best as you can. Your insurer may also ask that you do your part to mitigate further losses. For example, if a panel is torn off and you have a hole in your roof, you might need to cover the hole to prevent water from entering the home and compounding the damage.
When you talk to your insurer, make sure you also have:
-
The date and time of loss.
-
A description of the circumstances that caused the damage.
-
A copy of your purchase agreement. Remember that, depending on your coverage, only panels you own may be covered.
These are all things your claim adjuster will likely need to know.