Solar Panel Insurance: Essential Insights
Ned Flanders from The Simpsons, known for his deep faith and humor, viewed insurance as a gamble, opting not to insure his house. When his home burned down and he had to live with Homer, he faced a moral dilemma regarding his beliefs.
For most people, insurance is a necessary burden. The real risk lies in not having coverage, which can lead to significant losses.
Consider the scenario of your million-dollar home being completely destroyed without insurance or your brand-new SUV getting damaged in an accident without coverage. Just thinking about it is alarming.
This is why we invest in insurance, despite the costs. We insure our lives, homes, vehicles, health, boats, businesses, and more, leading to substantial expenses; for instance, Australians spend over $21 billion on health insurance alone.
If you’re adding a new solar panel system to your home, with its high-tech components, it certainly seems like something worth insuring, right? Well, the answer is… it depends.
Indeed, it often depends. This uncertainty arises because the solar industry is relatively new, making it crucial to stay informed.
Many aspects of solar technology are not yet common knowledge, and regulations are still evolving. Adding insurance to this mix creates a complex “grey area.” While insurers see insurance in black and white, it often feels ambiguous for policyholders, like hoping for the best.
Only the most diligent individuals understand the intricacies of their insurance policies, including the fine print and exclusions that are often overlooked.
This article aims to clarify the uncertainties surrounding solar insurance and provide more definitive guidance in this confusing intersection of solar technology and insurance.
You might be wondering: Do I need to insure my solar system? Is it automatically covered by my current policy? What if aliens damage my solar panels?
Before diving into those questions, a critical reminder: you must consult your insurer. While this article will help address your concerns, the only reliable information comes directly from your insurance provider. Always get written confirmation rather than relying on verbal advice.
Insurance policies vary widely, so check with your insurer. The information provided here is general.
Is My Solar System Covered?
Your roof-mounted solar array and its components are generally considered part of your home by insurers, not merely contents.
However, if your array is mounted elsewhere, like on the ground or a separate garage, the situation changes. We’ll explore that later.
A simple way to distinguish between what is part of the home and what is considered contents is to think about what would fall out if you turned your house upside down. Everything that falls out is considered contents, while everything else is part of the home. Since solar panels are fixed to your house, they are typically covered under your home insurance, not contents insurance.
Usually, if you have coverage with a major insurer, your solar array will be protected in the event of a disaster, as it is seen as part of your home.
Some insurers may limit coverage for renewable technology installations. For example, Allianz provides a maximum of $5,000 for renewable technologies in case of a disaster. This raises concerns if your solar system is valued at $35,000.
To avoid problems, always ask specific questions about coverage limits when discussing your solar installation with your insurer.
Generally, when you inform your insurer about your solar array, they will automatically include it in your coverage. You will need to assess whether you should increase the insured value of your home to reflect the cost of replacing your solar system.
For instance, if your solar system costs $25,000 and increases your home’s value by the same amount, the total value of your home could effectively rise by $50,000. To ensure you receive adequate compensation for the replacement of your solar system and its impact on your property value, you may need to adjust the insured amount, likely leading to an increase in your premium.
In summary, a roof-mounted solar array and its components are typically covered under your home insurance. It’s advisable to confirm this with your insurer and have them note it on your policy.
If you decide to increase your home’s insured value, remember to consider the potential increase in your premium.
What If the Array Is Mounted on a Separate Garage?
Some homeowners choose to install solar arrays on separate structures like garages or sheds. Most home insurers do not automatically cover these additional buildings, so you would need a separate policy.
In this case, you have two options: insure the entire structure where the array is mounted or insure the array separately. Each option has its drawbacks.
Insuring the Entire Structure
This may be an unnecessary expense, especially if you hadn’t insured that building before installing the array. Now, to cover your array, you’d be paying insurance on a building simply to support that coverage.
This might make sense if the building is already insured. For instance, if a granny flat is insured, your array would also be covered.
However, keep in mind that if your solar components, like the inverter and battery, are attached to your main home, they will be covered under your home insurance policy, while the panels on a separate structure may not be. Always verify with your insurer.
Insuring the Array Alone
If your array is ground-mounted or doesn’t fit standard insurance criteria, you might want to consider insuring it separately.
In this case, it’s best to consult an insurance broker. Larger insurers often focus on more typical risks and may not accommodate unique situations. However, brokers can help find insurance for unusual circumstances, though be prepared for higher premiums. Always assess whether the potential premium outweighs the benefits of coverage.
What About Damage from Weather or Installation Errors?
If a tree falls on your solar panels, your home insurance should cover the damage, as the panels are considered part of the house.
The same applies to hail or wind damage. Since the solar array is part of your home, it’s typically covered under your home policy.
If a fire damages your inverter or battery, those components would also be covered as part of the house. Always check with your insurer, as policy coverage can vary.
However, if a fire is caused by the inverter or solar panels, the situation may be different. Your insurance provider will likely inspect the installation’s quality and compliance.
It’s essential to understand your solar warranties thoroughly. Work with a reputable installer, as claims against a defunct installer won’t be honored.
Keep in mind that if your solar system malfunctions, it falls under warranty coverage, not insurance.
My Insurer Won’t Cover My Solar System
If your insurer refuses to cover your solar system, consider switching providers. If that’s not an option, reach out to a broker who can likely find coverage for you. Just make sure to evaluate whether the costs make sense; if your premium outweighs your solar savings, it may not be worth it.
Conclusion
For most homeowners, no action is necessary regarding insurance after installing solar arrays. Most major insurers will automatically cover the array and its components under home insurance.
If you’ve invested significantly in your solar system and increased your home’s value, consider discussing increasing your insured amount with your insurer, which may come with a premium increase.
If you are risk-averse and your array is not covered under your home policy, consulting an insurance broker can help you find suitable coverage.
Remember, your new solar system not only helps reduce your carbon footprint but can also save you money. Be cautious with insurance decisions to ensure you don’t negate your financial benefits from solar savings.
Lastly, when communicating with insurance companies, take your time. Submit questions in writing for a more reliable response. This will help you navigate the insurance landscape with confidence.
And if aliens do land and damage your solar array, well, you’ll have to handle that on your own!
