While it eventually pays for itself thanks to energy savings, residential solar panels are fairly expensive to install — costing roughly $20,000, according to HomeAdvisor [1] . Given the high price tag, it's crucial to make sure they're covered by adequate insurance coverage in the event of weather or fire damage.
Fortunately, most homeowners insurance policies cover damage to solar panels, so there shouldn't be any need to purchase extra solar panel insurance or any additional protection on top of your existing policy.
In this article, we break down what types of damages your solar panels are protected against, what parts of your policy provide coverage, and whether or not you should expect rate increases after installing them.
Does home insurance cover solar panels?
Yes, most insurers extend coverage to solar panels as long as the damage is covered under your policy. Examples of covered perils in homeowners insurance include wind, fire, lightning strikes, hail, and damage from a fallen tree.
When you file a home insurance claim for solar panel damage, you'll need to pay your policy deductible before your insurance provider pays out for the damage.
In most cases, you'll be covered under one of two home insurance coverages (dwelling or other structures) depending on whether the panels are attached to your home or not.
Dwelling coverage
If you have rooftop solar panels on the main part of your home or an attached structure, like your garage, they would be covered under your policy's dwelling coverage.
Dwelling coverage is the main part of a home insurance policy, providing coverage for the structure of your home, any structures that are attached to it, and built-in appliances.
Other structures coverage
If the solar panels are mounted to the ground or connected to a structure that’s separate from your house, they would likely be covered under your policy's other structures coverage. This is the part of home insurance that covers standalone structures on your property that aren't attached to the home, including sheds, detached garages, and fences.
Your other structures coverage limit is usually 10% of your dwelling coverage limit by default. If you recently installed solar panels or are planning to and you think they'll be covered under this part of your policy, you'll likely want to consider increasing your other structures coverage amounts.
What type of solar panel damage is covered?
Homeowners insurance will cover your solar panels from the same types of damage and loss that the rest of your home is covered against, including:
Wind
Hail
Fire
Lightning strikes
Fallen trees
Weight of snow or ice
Homeowners insurance doesn’t cover damage caused by earthquakes, flooding, or pests (like squirrels or mice), so if any of these cause damage to your solar panel system, your insurer won’t reimburse you for the loss.
Can solar panels increase your home insurance rates?
Improvements and renovations — including solar panel installation — typically increase a home’s replacement cost, or the full rebuild value of the property.
Because home insurance insurance rates generally go up with replacement cost, you can likely expect your home insurance rates to be higher if you add solar panels to your home.
What is an umbrella policy for solar panels?
In some states, utility companies require customers to carry liability insurance if they generate solar power. By requiring liability insurance, the utility is protecting itself from legal expenses (related to injury or property damage) caused by a customer’s net metering system malfunctioning.
Generally speaking, the larger your system, the more liability coverage you’ll have to carry. In Florida, for example, homeowners with solar panel systems greater than 10 kilowatts (kW) in size are required to carry $1 million in liability coverage.
Although homeowners insurance includes personal liability coverage, most companies only let you carry up to $500,000 of it, so where do you find the other half a million in coverage? By purchasing a personal umbrella policy.
Personal umbrella insurance provides policyholders with additional liability coverage that goes beyond their home and auto insurance coverage limits. In the event that your home or auto insurance liability limits are maxed out during a claim, your umbrella policy will kick in to cover any additional liability expenses.
This coverage is typically offered in increments of $1 million and up to $5 million, with a base policy costing around $300 a year.
