Like many of today’s homeowners, you may have contemplated installing solar panels on your home to save energy and be more environmentally friendly. But while the panels may certainly bring benefits to you and the environment, there are some issues to consider with respect to your home insurance policy because both the installation process and ongoing ownership and maintenance of the panels can cause some conflicts with your existing policy. Before starting the process, it’s best to review your policy to understand the implications. By having all of potential pitfalls identified, you can then make an informed decision without any regrets.
Many of today’s new homes already come with solar panels installed particularly if you live in cities that are known for being “solar cities” such as Minneapolis, Sacramento, San Antonio, San Diego, Tucson, and San Jose, amongst many others. But even if you are fortunate enough to have one of these homes, you still need to understand how your home insurance policy will treat the panels. First and foremost, you need to determine if you are the legal owner of the solar panels because in many instances, the solar panels are installed in a lease arrangement instead of outright ownership. In fact, USA Today recently published a story about the lease arrangement wherein homeowners only pay the solar panel companies for the use of the energy produced. If you are in one of these situations, you need to carefully understand the insurance obligations in the lease and determine if you would be responsible for any damage to the panels. If so, then it is your obligation to insure them.
If, however, you do not currently have solar panels and are simply investigating a purchase and installation, you should research the firm you intend to engage for installation. The process of installation is a full construction project and any damage to your roof is the obligation of the installer. Make sure you have a solid contract with the installation contractor and that they have proper liability insurance in the event you need to make a claim for damage to your roof.
At the same time you are exploring the purchase and installation of panels, you should be reviewing your home insurance policy. In most policies, property coverage exists for the dwelling, which is your house itself, as well as for structures attached to the dwelling. You should verify with your insurance company if they consider solar panels on the roof to be structures attached to the dwelling. If so, you should not have any problems, as the panels will be covered by your policy. One particularly important section of the policy to review is coverage for damage as a result of collapse. In many policies, collapse is excluded except in limited circumstances, so it’s necessary to verify if solar panels is one of the exclusions.
Lastly, do not forget to include the cost of your solar panels when evaluating the replacement cost of your home for insurance purposes. The added expense needs to be considered in the overall limit on your home insurance policy. By properly insuring your solar panels, you will be both an environmentally and financially sound homeowner.