How Solar Panels are Insured, in a Nutshell
When you own a solar system—whether purchased outright or financed—you’re responsible for insuring it. Leased systems are typically covered by the provider, but for ownership, it’s up to you.
Here’s what your installer will cover:
- Workmanship – Installation-related issues.
- Roof Penetration – Protection for roof modifications.
- Equipment – Warranties on panels, inverters, and more (often 10-25 years).
But damages caused by weather, theft, or vandalism? That’s where your Homeowners’ Insurance (HOI) comes into play.
Homeowners’ Insurance and Solar Panels
If you find that you need to add coverage for your solar panel system to protect against any unforeseen damage outside of your control, you will likely have to include it in your HOI policy. To do this, reach out directly to your HOI company and ask how they would like you to do it.
There are 2 major ways for an HOI company to provide such protections: one “solar-friendly” way, and one “solar-antagonist” way. We’ll cover both in detail below. You’ll want your HOI company to utilize the “solar-friendly” way; if they can’t, we at Spartan Solar have resources available for you in order to avoid an unpleasant HOI experience when you go solar.
Insurance Policies: The Good and the Not-So-Good
“Solar-Friendly” Homeowners’ Insurance Policies
If your HOI company is “solar-friendly” and allows for easy integration of a solar panel system into your HOI policy, this is how they will likely do it:
Step 1)
- Identify the “package price” of the entire solar panel system. This can be easily found in the installation agreement and will be used by the HOI company to price coverage.
Step 2)
- Increase the home’s “dwelling” coverage amount by the package price of the solar panel system.
Example:
- Home A has $400,000 of Dwelling Coverage.
- Home A acquires a solar panel system with a total package price of $30,000
- Home A’s Dwelling Coverage is increased to $430,000 and the system and home are now fully insured
This exact example just happened to me in my own home, and my insurance premium only increased by $5 per month - well worth it considering my new system is saving me over $600 every year on my electric bill!
“Solar-Antagonist” Homeowners’ Insurance Policies
If your HOI company is not solar friendly, they may use the following process instead:
- Appraise total package price using a Fair Market Value (FMV) appraisal. This number is usually higher than the package price in the agreement.
- Write a new line of coverage specifically for the solar panel system into your HOI.
- Grossly overestimate the liability associated with a solar panel install.
Using this strategy, HOI companies can get away with increasing their premium by up to $1,000 or more annually just because their client went solar!