Do Solar panels affect your homeowners rates?
If you have been considering putting your rooftop to work by installing a solar system it is important to remember that there will be ramifications for your homeowners insurance.
While solar panels are not yet a mainstream source of power there are getting much closer. More and more people are putting panels on their roof to power their homes and even sell power back to the local utility. According to GTM Research, a new solar system was installed every four minutes in 2013, and the worldwide solar industry had over 100 gigawatts of capacity installed, more than double the amount in 2011.
If you have been considering putting your rooftop to work by installing a solar system it is important to remember that there will be ramifications for your homeowners insurance. Luckily, most of them are pretty minimal. You can expect a fairly small increase in your premium for most systems but the peace of mind knowing that your solar panels are covered in the event of a devastating storm will be well worth the rate bump.
A solar panel installation should be considered a major improvement or addition to your home. They are a long-term investment that should be properly protected in the event of damage or destruction. While solar panels share a number of perils with your roof and house such as wind damage and fire, they also come with their own unique set of risks. Foreign objects striking the panels or electrical damage due to a lighting strike or power surge are just a couple of examples. Repairing an extensive solar system can quickly get very expensive.
Coverage Varies
In many cases, your panels would be protected under Coverage “A” Dwelling Value in a typical homeowners policy. However, there can be variances in policies and what is covered by one insurer may not be covered by another. Some insurers may refuse to cover not only the solar panels but also your entire house if a solar system is installed. Whenever you are considering a major project or making a significant change to your home, it is wise to check with your insurance agent beforehand to assess the affect on your homeowners policy.
If a solar system is not protected by your current policy it may be possible to add a rider to make sure it is covered. If your agent determines that your current insurer will not cover a solar system, it may be time to shop your policy around. Insurers rate risk differently so there may be a big difference in the coverage provided as well as the premium bump due to solar panels.
Once the system is installed you should notify your agent and raise your coverage levels accordingly. If your solar system will cost $20,000 to replace, it is a good idea to up your coverage levels by the same amount.
The affect on your premium will vary but it should not be a huge increase. In some cases insurers even offer a discount as data shows that environmentally conscious people tend to make fewer claims.
Professional Installation
The majority of homeowners have solar panels installed on their rooftop which can lead to roof damage if improperly installed. As with any major renovation to your home, use a professional licensed and bonded installer. If the system is not installed correctly there is a chance that any claims related to the panels could be denied.
Your insurer may send out an inspector to have the system checked out after installation before adding it to the policy. It is also a good idea to inventory your entire solar setup with photos and video. This will make the claims process easier and quicker should your home, and solar panels be destroyed in a fire or other natural disaster.