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Does Homeowners Insurance Cover Solar Panels?

Yes, homeowners insurance usually covers solar panels. Your policy may provide coverage under either your dwelling or other structures, depending on the location of your solar panels. Solar panels usually fall under dwelling coverage if they are integrated into the house. Otherwise, they may fall under other structures coverage if they are in the yard or otherwise not integrated into the house. 

The Rise of Solar Panels 

The use of solar panels in the U.S. has surged, with over 500,000 installations in 2021 and 700,000 in 2022. In total, about 3.2 million homes benefit from solar panel energy. Government incentives, environmental concerns, and a desire to save costs have contributed to this rise. 

Understanding how homeowners insurance covers solar panels becomes increasingly important as more homeowners invest in solar energy. If you are interested in installing solar panels, you should review your policy carefully and contact your insurer for clarification.

How Does Homeowners Insurance Cover Solar Panels? 

Two coverage parts on your homeowners insurance policy could provide coverage for solar panels: dwelling and other structures. 

Dwelling Coverage 

Dwelling coverage protects the structure of your home, including the foundation, walls, roof, and built-in appliances. This insurance typically covers common perils like fire, vandalism, and natural disasters. This policy covers solar panels attached to the home, like on the roof, and is considered part of the dwelling. 

If covered perils damage the panels, dwelling coverage will cover the repair or replacement costs. The specifics of each policy will vary, and detached structures or specific perils that are not covered by standard policies may require separate coverage.

Other Structures Coverage 

Other structures coverage covers structures on your property but separate from your main dwelling, such as detached garages, fences, or sheds. This coverage typically covers the same perils as dwelling coverage, such as fire, vandalism, and storms. Other structures will usually cover solar panels if your panels are not attached to the dwelling but are instead in the backyard or somewhere away from the home. 

What Types of Damage Does Homeowners Insurance Cover for Solar Panels? 

As a homeowner, it’s essential to understand your insurance coverage as solar panels become more common for energy efficiency and cost savings. Solar panels are usually covered by a standard home insurance policy for the following scenarios:

  • Weather: Storms that bring on hail or high winds are typically covered.
  • Fire damage: Fire is the most common covered peril on even the most basic homeowners insurance policy
  • Vandalism or theft: Solar panels are usually covered if someone damages or steals your panels.
  • Falling objects: You will usually have coverage if a tree or something else falls on your solar panels and damages them.
  • Civil disturbances: Damage resulting from riots or civil unrest is also typically covered.

Solar Panel Exclusions 

As with all aspects of insurance, there will be exclusions to be aware of. Some typical exclusions include:

  • Wear and tear: There is usually no coverage for gradual deterioration.
  • Manufacturer defects: Manufacturing flaws are generally not covered but may be covered by the manufacturer. Contact them for more details.
  • Earth movement: Earthquake damage and ground movement are not covered.
  • Flood damage: Floods are usually excluded from homeowners insurance policies, but flood insurance can be purchased separately.
  • Neglect or lack of maintenance: If you do not take care of your home or solar panels and damage ensues, you will not be covered.
  • War or nuclear incidents: War and atomic events are excluded.

How Does Installing Solar Panels Affect Insurance Premiums? 

Installing solar panels to your home can affect your insurance rates, though usually minimally. Solar panel installation may increase your home’s replacement value, potentially increasing premiums if you increase your coverage limit. With that said, many insurers offer discounts due to increased safety measures and energy savings. 

Leased panels may not impact insurance policies much since the leasing company usually assumes responsibility. However, if you own the solar panels, inform your insurance company to ensure adequate coverage. Once you decide to purchase solar panels, call your insurer to discuss so you can be well informed about how your policy will respond.

Do You Need a Supplementary Policy? 

Extra endorsements or policies are available for solar panels if you choose to go that route, although it is not necessary for most standard homeowners insurance policies. A standard endorsement can vary in premium but is usually between $50 and $100 per year. Usually, it simply provides a separate limit over and above your dwelling or other structures coverage. 

You can also purchase a separate policy for them, which will cost a higher premium. Consider this option if your homeowner’s policy has a gap in coverage due to low limits or exclusions. 

All in All 

If you choose to install solar panels in your home, you must consider the impact on your homeowner’s insurance. Most standard insurance policies will cover the repair or replacement of solar panels damaged by a covered peril under either dwelling or other structures coverage, depending on where they are installed. If you feel your policy has gaps in coverage, you can add an endorsement or purchase a separate policy. 

Frequently Asked Questions 

Many insurance companies provide a discount for using green energy sources. Inquire with your insurer to see what possible discounts they offer and if green or smart energy is one of the options. If not, you can always shop around and look for an insurer that does. 

You will need to read both your warranty and insurance policy carefully to determine who will provide coverage in a specific situation. If a warranty will provide coverage, you should start there first. If not, then attempt to make a claim on your insurance policy. Be sure the adjuster is aware of the warranty and vice versa, and they can work together to determine coverage.