Yes, Solar Panels Are Usually Covered By Home Insurance. Here’s What You Need To Know!

Written By Kenneth Wilson  |  0 Comments

The high cost of electricity has led many homeowners to consider adding solar panels to lower some of their monthly expenses. Panels are expensive and vulnerable and require insurance to prevent loss from damage or theft. Most insurance companies provide some form of cover, and it is essential that you know to what extent it will affect your policy.

Most home insurance companies provide comprehensive or partial solar panel cover. Hail, strong wind, and lightning are some of the factors often excluded by insurers and may require an additional policy or an amendment to a policy, which can result in a higher premium.

Panels are exposed to various elements, especially because they are mostly mounted on a roof and have no protection to prevent damage. Insurance is essential to protect your solar investment, and most companies have some form of restrictions that you must consider.

How Does Homeowners Insurance Cover Solar Panels?

Workers installing solar panels on residential roof

With solar panels appearing on roofs all around the U.S. and the cost of installing a solar system so high, we must consider whether our insurance covers it. Unless specified, roof-mounted panels are generally covered under your homeowner's policy, although the coverage may be limited to policy restrictions.

Insurance companies vary in their coverage parameters concerning solar panels, and you must confirm to what extent your policy provides cover. Some exclude hail and wind damage, while others have more or no restrictions.

Some insurance companies allow for coverage as a rider or endorsement policy for a detached structure or panels mounted on the ground. Overall, every insurance company provides different coverage, which may be limited or nonexistent, and it is vital that you confirm it with them and not assume that you have coverage.

What Type of Damage is Covered?

Panels must have maximum sunlight to work effectively, making your home's roof the perfect place to fit them. Effective insurance coverage must consider the reasonable risks involved and provide cover accordingly. Your policy agreement will show the extent it covers panels and generally include:

  • Smoke and fire damage
  • Wind, lightning, and hail damage
  • Theft and vandalism
  • Water damage, including frost and mold-related damage

Generally, most insurance companies do not cover certain risks like:

  • Earthquake damage
  • Weather damage is caused due to aging
  • Flood damage (some insurance companies cover flooding under an additional policy)

If your panels are on an outer building or structure like a shed, they may not be covered, and you must read through your policy document or contact your insurance company to clarify its coverage.

Do I Need Insurance Coverage If Solar Panels Are Leased?

Leasing panels are very popular, and many homeowners prefer this option to avoid hassles like maintenance, breakage, and other unforeseen problems. The insurance on leased panels differs, and there are three possibilities:

  • Companies who lease panels often provide insurance covered within the lease agreement, and the extent of the cover will be specified within the contract.
  • The leasing company arranges a separate insurance policy, which the homeowner must pay as part of the contract and may have certain restrictions. 
  • Some insurance companies allow homeowners to cover leased panels. The cover may be limited, and the extent of the cover must be communicated to the leasing company beforehand.

Watch Out for Wind and Hail Exclusions

Hail damaged solar panels on roof

The biggest cause of damage to solar panels is wind and hail, which is no surprise considering it is on your home's roof. Some insurers have hail and wind cover exclusions, and many homeowners only realize it once they claim and get repudiated.

Speak to your insurance company or check your policy to see if it covers wind and hail. If it is covered, it will be stipulated in the policy and usually has an additional cost. There are insurance companies that specialize in separate hail and wind damage insurance. These companies work with your standard home insurance and cover hail and wind damage if it is excluded from your policy. 

Know Whether You Need a Separate Policy

Solar systems can save your electricity bill greatly, but they are expensive and vulnerable to theft, hail, windstorms, etc., requiring insurance to protect your investment. With its popularity growing all over the U.S., most insurers have considered their risk and made provisions to accommodate homeowners. 

Because panels are a recent idea, most insurance companies are still working out the risks and to what limit to cover them. Almost all insurance companies provide cover to some extent, but you must inquire if there are limits.

When insurers do not provide comprehensive coverage, you can outsource the coverage of your solar panels to a third-party insurer specializing in solar insurance. There are various reasons why you may need a separate policy like:

  • Your home insurance does not cover panels.
  • Your policy excludes ground-mounted panels.
  • Your solar system's value exceeds your home insurance coverage.
  • Your policy does not cover panels on outbuildings like carports or sheds.
  • If you want coverage generally excluded, like vandalism and earthquake cover.
  • Your home insurance provides limited cover and excludes hail and wind damage.

Do Solar Panels Raise Homeowners Insurance Prices?

Your insurance premium is subject to the value and risk the insurance company carries, and any value added may increase. If anything happens, the insurer must replace the panels under the policy agreement and adjust the premium according to the risk.

Here are some reasons why your premium will increase if you add panels to your policy:

  • Theft: panels are in high demand, and thieves target homes with solar systems. Some areas have a lower panel theft rate than others, and insurers consider these factors when adjusting the premium.
  • Weather: some areas experience regular hail and windstorms, leading to a higher probability of solar panel damage. Insurance companies consider these factors, exclude covering hail and wind damage, or raise the premium to accommodate the risk.
  • Value: solar systems are expensive, and as a fixture, they increase the value of your home, and insurance companies adjust the premium accordingly.

Do I Have to Tell My Insurance Company About Solar Panels?

Homeowners often forget to inform their insurance company of any improvements which may affect the risk. Any improvement, including solar panels, must be communicated to your insurer to give you peace of mind and simultaneously provide you with the extent of your cover.

If you inform your insurer that you have panels added to our home, you can evaluate if the cover is worth the premium increase and if the cover is adequate. Once you have informed your insurance company of the panels and are not happy with the cover or premium, you can exclude it from the cover and carry the risk yourself.

If the panels are leased from a company, you must inform your insurance unless the panels are covered under the lease agreement or have a separate policy that provides coverage.

Final Thoughts

Solar panels are expensive, and you must consider insuring them. Every insurance company has its requirements regarding panels, which are normally laid out within their policy rules. There are various factors to consider, like limits, exclusions, premiums, and the fact that another insurer will always give you the coverage you need.

About the Author

I can build it, and I can help you get the patio enclosure you want! I got my start in the Florida patio industry back in the 70s as a young general laborer looking for something to make a few bucks. At the time I never thought it would end up as my career. Over the years I grew beyond the laborer position, becoming a foreman, superintendent, and then into executive management for some of the largest patio contractors, and material vendors. Now into retirement and slightly bored, I offer consulting services to new and existing contractors, and publish this website to help the people who love their patio's and screen enclosures the most - YOU!

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