Are solar panels covered by my homeowners insurance policy?
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Asked April 23, 2015
Solar panels are relatively new as a mainstream feature on real estate; however, they are increasing in popularity. The last available statistics from the Solar Energy Industries Association (SEIA) state that over 140,000 people had solar panels installed in their homes at some point during the course of the year.
The Company That is Serving as Your Underwriter
The most important aspect of whether your insurance company will cover solar panels is, of course, the actual insurance company that is serving as your financial underwriter. If your house did not come with solar panels and you are thinking of installing them, you should first check with your current homeowner insurance carrier in order to see if they have a contingency for that feature.
Although there is a huge increase in the number of solar panels that are being installed in homes today, there are certain geographical locations that simply do not have enough solar panels installed to make the expenditure or risk worth it for the insurance carrier. This is especially true if you are dealing with a smaller, more local home insurance company. However, even some of the bigger and more national companies will not cover solar panels in certain parts of the country. The bottom line is this: Before you install, call.
If you make the call and find out that there is no contingency for solar panels, you must now make a decision on whether to install. If you install, you will have to switch home insurance companies. Competition will ensure that you will find a company that will cover you; however, you may find the rest of the process not worth your time. It is definitely worth your while to make the decision slowly and only after considering all of the aspects of what a switch would entail.
Staying in Compliance
If you are dealing with a home that does not already have solar panels, there may be a regulatory issue that you do not know about. The United States Department of Energy (DOE) recommends that you check your local municipality for any regulations that may apply to you. You may also have to submit your new plans to your homeowners association depending on the type of neighborhood that you live in.
There will likely be local codes that you will have to stay in compliance with as well. Part of this compliance will be a payment of fees, so make sure that you incorporate this into the overall cost of implementing solar panels into your home.
Increasing Coverage on the Home
In most cases, if you are trying to add solar panels to the home that are not already attached at initial purchase, you will need to change the insurance policy. The exact wording will change from company to company. One of the wordings that an insurance company may use is "Coverage A Dwelling Value."
In this particular example, the appraisal for the solar panels was added to the appraisal for the home, increasing the total value of the home by around $20,000. The home was insured for this new total value with the solar panels incorporated into the overall protection. The homeowners submitted to a slightly higher monthly premium in exchange for the additional protections as well.
Answered May 5, 2015 by Anonymous