Solar panels and home insurance: Here’s what you need to know

From property owners to people looking to buy new homes, sustainability and eco-friendliness are two major factors that are being considered today. People are actively looking to invest in energy solutions that help both the planet and the energy bills to cool down a notch. That’s why the Sun, being an abundant source of good, clean energy, is enjoying a growing interest among people.

Solar energy is being adopted by homeowners in the big cities and suburbs equally. But when you install a solar array on your property, you have to think about the insurance as well. Solar panel installation can range between $15,000-$25,000 before the tax incentives. It’s only natural that homeowners would want to insure the asset.

When solar panels come into the frame, the home insurance structure needs to be tweaked considerably.

Does homeowners insurance policy cover solar panels?

The photovoltaic cells inside the solar panels absorb the photons from sun rays. If you’re worried about panels absorbing something, don’t be. One good hour of the sun can power the entire Earth for a year – it’s that abundant.

The cells turn the sunlight into direct current (DC) in a process we call the photovoltaic effect.

The inverter steps up

The major concern for homeowners is whether such a costly investment will be protected by insurance. The good news is that most insurers include solar panels in the homeowners’ insurance policy. It’s because these panels are generally installed on the roof, which makes them a part of the property. Roof-mounted panels are covered against the same threats as your house.

Solar panels that may require an insurance rider

Insurers may feel differently about solar panels that are not a permanent part of your property. Consequently, they may require you to go for an insurance rider. Ground-mounted panels and solar carports are two such solar structures that are not generally considered part of the house. Solar carports offer a canopy over parking lots and ground-mounted panels are installed on separate land.

Since these are prone to damage, you have to buy an add-on to increase coverage.

The impact of solar panels on home insurance premiums

Despite a steep decline in price over the last decade, solar panels are still a pretty big investment. To be on the safer side, you should increase insurance coverage. However, more insurance coverage means more premiums for you to pay.

Increasing insurance coverage can be tricky. You should talk to your insurer to understand the standard coverage and how to increase coverage keeping the added value of the house in mind.

How to fine-tune solar panel insurance?

Solar panels should last well over 30 years and hardly require any maintenance. Considering how stable and safe they are, insurers don’t hesitate to include them in standard insurance policies. On top of that, if you live in areas where natural disasters are frequent, your insurer can offer add-ons with the standard policy.

However, it’s best to discuss the terms and weed out hidden charges before you sign the papers. If you have taken a solar lease or signed a PPA, the panels will be covered by the party who installs them since you don’t actually own the panels.

If your insurer does not cover solar panels, you should look elsewhere. Considering the eco-friendliness, insurance companies offer steep discounts. Always make sure to understand what your agent has to say and pick up the one that suits your demands the most.

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