Thinking about going solar? You’re not alone. Between January 2017 and February 2024, Vermont saw over 16,000 solar permits issued, mostly for homes, and New Hampshire boasted 18,644 residential solar installations between January 2017 and the end of last year. With installation costs dropping, the desire to cut back on fossil fuels and greenhouse gas emissions, and generous state and federal energy rebates, it’s no wonder New England homeowners are jumping on the solar panels bandwagon.
But there’s something crucial you might be overlooking: your homeowners insurance. As solar panels become more common, it’s essential to understand how they’re covered under your home insurance policy. Whether they’re on your roof or nestled in your backyard, making sure you have the right coverage is key to keeping your investment—and your peace of mind—intact.
Topics Covered
Solar Panels Insurance Coverage
If you’ve hopped on the green energy bandwagon and decked out your home with shiny new solar panels, you’re probably wondering: “Are my solar panels covered by my home insurance?”
The short answer is: Yes!
According to the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL), residential solar energy installations typically fall under standard homeowners insurance.
But there are a few things you should be aware of. Your standard homeowners insurance usually covers solar panels as long as any damage to them falls under the perils listed in your policy. Solar panels are usually covered from the following perils:
- Wind
- Fire
- Lightning
- Hail
- Falling Trees
Dwelling Coverage and Solar Panels
If your solar panels are installed on the main part of your home or an attached structure like your garage, you’re in luck! Coverage for these panels typically fall under your policy’s dwelling coverage. This is the cornerstone of your home insurance, covering the structure of your home, any attached structures, and even built-in appliances. So, in the event of damage from a storm, fire, or another covered peril, your rooftop panels are safe and sound under dwelling coverage.
Other Structures Coverage
What if your solar panels are ground-mounted or attached to a separate structure on your property, like a detached garage or shed?
In this case, your panels would be covered under the other structures coverage part of your home insurance policy. This coverage is designed for standalone structures that aren’t connected to your home, such as fences, detached garages, and ground-mounted solar panels. However, making sure you have enough other structures coverage is another matter.
Checking Your Coverage Limits
Here’s the catch: your other structures coverage limit is typically set at 10% of your dwelling coverage limit by default.
That means it’s time to review your coverage limits. A limit is the max amount your policy will shell out for a covered loss. If a storm or an accident damages your solar panels, you’ll need to pay your deductible first before your insurance covers the rest. If you’ve recently installed solar panels or are planning to, and they fall under this part of your policy, you might want to rethink your coverage amounts. Increasing your other structures coverage can ensure those panels are fully protected without any unexpected gaps.
There’s another thing you need to be aware of.
When you improve your home, whether it’s a kitchen remodel or installing solar panels, you’re increasing its replacement cost – that’s the total amount it would take to rebuild your home from the ground up. And since home insurance rates are often tied to this rebuild value, you can generally expect an increase in your insurance premiums when you add solar panels. It’s the cost of protecting that new investment.
How Much Coverage Do You Need?
The amount of coverage you need typically depends on the size of your solar panel system. For instance, in some states, if your system is over 10 kilowatts (kW), you need to carry $1 million in liability coverage. Sounds like a lot, right? Especially considering that most homeowners insurance policies max out at $500,000 in liability coverage.
Enter the Umbrella Policy
So, where do you get the extra $500,000 in coverage? That’s where a personal umbrella policy comes in handy. Think of an umbrella policy as extra protection that kicks in when your existing home or auto insurance liability limits are maxed out. It’s like a safety net for your safety net!
What Does an Umbrella Policy Cover?
A personal umbrella policy provides additional liability coverage beyond the limits of your regular home and auto insurance. This means if you’re hit with a claim that exceeds your current liability limits, the umbrella policy takes over. This coverage is usually available in increments of $1 million and can go up to $5 million, depending on your needs.
How Much Does an Umbrella Policy Cost?
Here’s the good news: a base umbrella policy typically costs around $300 a year. That’s a small price to pay for the peace of mind knowing you’re fully covered.
The bottom line? Make sure your policy’s limits are high enough to cover the cost of repairs or replacement for those panels. The best way to find out if you’re sufficiently covered is to talk to a local insurance expert today.
What About Leased Solar Panels?
Leasing your solar panels? Then you’re off the hook for insuring them – the leasing company handles that. They own the panels, so it’s their responsibility to maintain and insure them. But it’s still wise to double-check the details of your lease agreement and ensure that everything is crystal clear.
Filing a Claim
If your beloved solar panels do take a hit, filing a claim follows a straightforward process. Remember, you’ll need to cough up your policy deductible before your insurance steps in to cover the rest. So, keep that in mind when planning for potential repairs.
Protecting Your Investment
Solar panels are a significant financial investment. Ensuring you have adequate coverage is crucial for your peace of mind. Connect with your insurance provider to review your current policy. They can help you figure out if you need to make any adjustments to ensure you’re fully protected should the unexpected happen.
Need to learn more about Homeowners Insurance?
Our agents are ready to help you out, so contact us to learn how we can customize your insurance policies to meet your needs.
*Disclaimer: We offer content for informational purposes; Co-operative Insurance Companies may not provide all the services or products listed here. Please contact your local agent to learn how we can help with your insurance needs.
Sources
Allstate. Are solar panels covered by homeowners insurance? https://www.allstate.com/resources/home-insurance/solar-panels
Nationwide. Are solar panels covered by home insurance? https://www.nationwide.com/lc/resources/home/articles/solar-panel-insurance
Policy Genius. Does homeowners insurance cover solar panels? https://www.policygenius.com/homeowners-insurance/solar-panel-insurance/
Renewable Energy Vermont. What does Solar Look Like in Vermont? https://www.revermont.org/what-does-solar-look-like-in-vermont
Solar Energy Industries Association. New Hampshire Solar. https://www.seia.org/state-solar-policy/new-hampshire-solar The Motley Fool. Will Adding Solar Affect My Homeowners Insurance? https://www.fool.com/the-ascent/insurance/homeowners/articles/will-adding-solar-affect-my-homeowners-insurance/