Does Home Insurance Cover Solar Panels?

The Solar Energy Industries Association (SEIA) reports that solar energy adoption is booming in the US, with a total installed solar capacity of 140,000 MWdc (MegaWatts defined conditions) through the third quarter of 2022.

As more American households turn to solar power for its renewable and cost-saving benefits, homeowners need to understand if their home insurance will cover damages or losses related to their solar panels.

Solar panel insurance coverage is a concern among new solar adopters. It’s, therefore, essential to ask the right questions when shopping for insurance. Your solar panel systems are a significant investment, and it’s wise to ensure they are adequately protected against loss and damage.

The good news is that most home insurance policies do provide some coverage for solar panels. However, what exactly is covered will depend on individual policy details. Keep reading to learn more about residential solar panel insurance.

Is There Such a Thing as Residential Solar Panel Insurance?

When it comes to solar panel insurance, most home insurance policies already have your system covered, so there's no immediate need for a separate residential solar panel insurance policy. Solar panel systems and rooftop panels are deemed a permanent feature of the property, much like other additions such as security systems or patios.

Nearly all types of rooftop solar systems that are securely attached to your property should be covered under the terms of your solar panel insurance policy, including monocrystalline panel systems, polycrystalline panel systems, hybrid panel systems with heat exchangers, and solar tiles.

These will typically be covered for damages from theft, vandalism, falling trees, fire, and ground subsidence. However, some solar panel insurance policies may not protect against specific threats (e.g., wind, flooding) that may cause damage to your system, so be sure to double-check your home insurance and solar panel insurance policies for exclusions.

It's important to review your insurance policy as you'll only receive coverage if a covered peril damages your panels. Covered perils are the types of damage that your insurance will cover replacement or repair for, such as hail or fire.

That said, most standard home insurance policies don't cover damage caused by normal wear and tear or natural disasters like earthquakes or floods. If you live in an area prone to these disasters, you may want to contact your insurance provider directly and ask about additional coverage, such as a separate residential solar panel insurance policy or add-on rider to your existing policy.

In addition, systems like ground-mounted panels, solar panel carports,  freestanding solar panels, or systems large enough to require separate coverage may not be covered under a standard home insurance policy. So it’s important to discuss these details with your provider in advance.

Do Solar Panels Affect the Value of a Property?

When you invest in large-scale home improvements, such as solar panels, the value of your property is sure to increase. Solar panels are an energy-efficient and eco-friendly option for your home. They also make a very attractive selling point for prospective buyers. Solar panel installation may cost anywhere between $15,000 to $35,000 in the US, making solar systems a significant investment that can improve the value of your home.

The US solar market is growing rapidly, and the average cost of residential solar installations has dropped by more than 60% in the last decade alone. This means that in addition to increasing the value of your property, you can also benefit from reduced installation costs.

Do Solar Panels Increase the Cost of Home Insurance?

Yes, installing solar panels can increase the cost of your home insurance due to its implied value. Your home insurance policy considers not only the value of the physical structure but also the belongings inside it and the modifications you make to your property.

Home insurance premiums are typically determined based on the home's value. This ensures it is adequately protected if an incident that falls in the purview of your policy  occurs. As a result, most solar homeowners might need to increase their insurance policies to match the increase in their home's value.

If you plan on getting a solar power system installed in your current dwelling, you should also make sure your insurer knows about it. It is always important to inform your insurance provider of any modifications you make to your house, such as installing solar panels, so you are adequately insured.

Going solar not only increases your home's market value but also magnifies its rebuild cost. This refers to the cost required to rebuild your home from scratch in the event of total destruction.

It is an essential consideration for insurance providers since anything that affects the structure of a property needs to be accounted for. A slight rise in premiums may occur as a result.

How Much Does Solar Panel Insurance Cost?

As mentioned, most solar panel systems are covered by standard home insurance policies. As opposed to commercial solar panel insurance, which is determined on a standalone basis, residential solar panel insurance is added to a home insurance policy, if needed, in the form of a solar panel insurance rider or an increase in your policy premium.

In most cases, determining the cost of residential solar panel insurance is a straightforward calculation based on the system’s value or how much it would take to replace it. This total amount typically includes all other valuables in your home, making up a property's total insurable value.

In the case of complete destruction or loss, your total insurable value denotes the sum of all replacement costs for any covered property and content within. In simpler terms, if you experience a catastrophic event such as a flood or fire that destroys your home, this value is the sum the insurance provider would need to pay for rebuilding your home and providing similar living conditions for you and your family.

Establishing the insurance rate for your solar panel system is largely based on the

estimated risk to your home. Usually, homeowners' property premiums are assessed by these four criteria:

Construction: The scale and type of materials used for your home.

Occupancy: The risks associated with the type of people and activities at home.

Location: The level of natural disasters and the associated risks.

Protection: Smoke alarms, central station fire alarms, moisture detectors, and similar features count as home protection.

Each of these aspects affects the insurance rate for your home, including your solar power system.

Only Trust the Best Solar and Roofing Providers

Going solar is a huge step; you'll want to trust only the best providers for your roofing and solar panel needs. At AMECO Solar and Roofing, you can rest assured that your home is in expert hands. With our comprehensive services, homeowners can be sure their investment will be protected for years to come.

Our team has been in the solar industry for almost five decades now, providing high-quality solar and roofing services to help homeowners make informed decisions about their home energy needs. From solar panel installation to solar batteries and system maintenance, AMECO has you covered!