Solar power and homeowners insurance

On May 9 California became the first state to mandate that all new homes have solar power. The rules go into effect in two years, and are part of the state’s efforts to cut greenhouse gas emissions.

Under the new rules, individual homes must have rooftop solar panels, or a shared solar-power system serving a group of homes. Rooftop panels can either be owned outright and rolled into the home price, or made available for lease. The requirement is expected to add $8,000 to $12,000 to the cost of a home, according to the New York Times. However, savings from heating and cooling could add up to $80 per month.

To help homeowners understand whether solar panels are covered by homeowners insurance, we’ve put together this Q&A.

Q: Are my solar panels covered by homeowners insurance?
A. Yes. Most solar panels are considered a permanent attachment (like a deck) and are therefore protected by a homeowners policy. You will want to call your insurance company and make sure your panels are covered.

Q: How much coverage do I have?
A. Your insurance policy’s coverage limit is the maximum amount that it will pay toward a covered loss. Since solar panels can be expensive, make sure your coverage limit is adequate.

Q. Will having solar panels increase my homeowners insurance premiums?
A: Most likely, yes. Some carriers allow owners with solar energy systems to purchase an optional endorsement to cover the panels. Others include the coverage in the dwelling coverage (Coverage A), if the panels are on the roof of the home, or under “Coverage B,” if they are on the ground or on the roof of a detached structure. Either way, there are replacement costs associated with the panels that would likely increase homeowners premiums.  Homeowners can expect to benefit from solar with increased energy efficiency in the home, but time will tell if the economic advantage of having solar panels outweighs the incremental, upfront costs.

Just like residential sprinkler systems increase water-damage claims, it’s reasonable to expect that solar panels, when attached to roofs, might also increase the chances of roof claims because of damage caused by a windblown panel or a leak at the point of contact, as examples.

Q. What are some of the risks of having solar panels?

A: If a home catches fire, solar panels can be challenging for firefighters. The PV arrays increase the risk of electrocutions, slips and falls and other serious injuries. If the fire is on the roof, the concealed spaces between the panels make it very difficult to get them extinguished. Solar panels are always live, and contact with them with them can cause shock or electrocution. Fire departments are implementing programs to learn how to handle solar panels.

 

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