Does Home Insurance Cover Solar Panels?

Environmentally-friendly projects are rising in popularity, thanks to a focus on the importance of renewable energy sources to help counter the effects of climate change. One of the most popular ways that homeowners can become eco-friendly is by installing solar panels.

On average, Michigan has 170 sunny days every year, which is 8.5% more than Germany, the leading European country in terms of the production of solar energy. As such, homeowners have a great opportunity to become more energy efficient, and save money, by installing solar panels on their homes.

With the average solar installation in the state costing between $15,980 and $21,620, though, it’s quite the expensive undertaking. Despite the high upfront cost of a solar installation, homeowners can typically receive major return on investment with solar, with the average payback period being 11.75 years.

If you’re considering installing solar panels in Michigan, it’s important to understand whether your home insurance would cover this major investment. After all, solar panels are susceptible to the same weather-related damage as other parts of your home such as your roof.

Let’s dive deeper into the factors that affect whether your home insurance covers solar panels, as well as some other things to consider.

Where are They Installed?

How and where the solar panels are installed will go a long way in determining whether they are covered by your home insurance policy. If your panels are installed as a permanent fixture on the roof of your house, then the panels are most likely included as part of your dwelling coverage. 

In this regard, the solar panels are treated just like the rest of your roof. If they are damaged due to a falling tree, wind, hail or other weather-related event, your home insurance policy will typically provide coverage to help you repair and/or replace them.

Depending on your property and where you live, you could also install solar panels that aren’t attached to your roof. The panels could instead be installed on the roof of a garage, or even as a solar array that’s mounted to the ground. In both of these cases, it’s likely that the solar panels will fall under the other structures coverage. 

This is an important distinction, as the dwelling coverage will be much higher than the other structures coverage.

Who Owns Them?

If you own the solar panels outright, then you will be the one responsible for providing insurance coverage for them. 

If you lease the solar panels, it’s possible that you may not need to provide insurance for them. Some solar leasing companies will carry insurance for solar panels, since the panels are technically theirs. 

Other companies do not carry this coverage on their own, though, and will require you to carry your own insurance. In either case, it’s important that you notify your home insurance company that you are installing solar panels, as it could affect claims down the line — even if the solar leasing company has its own insurance.

Another thing to keep in mind is that if you are insuring panels that you lease, your home insurance carrier may only provide limited payouts for damage sustained due to hail or wind — since another company actually owns the panels.

Do I Need Separate Insurance?

Technically speaking, you do not need to purchase a separate insurance plan for solar panels, as discussed above. However, you may want to consider increasing the limits of your home insurance policy if you install solar panels.

Talk to your insurance agent to find out what their recommendation would be. Increasing your coverage limits may be beneficial to you, since the cost of replacing solar panels would be quite expensive. It could even exceed the limits of your home insurance policy, especially if they’re not installed on the roof of your home. 

If your solar panel system is not attached to the roof of your home, then it’s possible you may need a completely separate insurance policy to ensure they’re covered. This is especially true if the panels are mounted to the ground. These solar arrays may not automatically be covered under the other structures coverage of your home insurance policy.

Will My Home Insurance Premium Go Up?

Having solar panels installed alone will usually not increase the premium of your home insurance policy. That’s because the panels on their own do not present additional risk.

That being said, if you do end up increasing your policy limits to make sure that you are covered, then you likely will see an increase in your premium. That would be the case no matter what you were increasing your coverage limits for. 

Keep in mind that if the cost of your home insurance policy does go up as a result, it would be a minimal increase compared to the amount of money you might have to pay out of your own pocket should the panels sustain damage. It’s also important to note that solar panels are very susceptible damage since they’ll be outside, installed in elevated areas (in most cases). 

Signature Insurance Can Cover Your Solar Panels

It’s always important to ensure that your biggest investments are protected. Any time that you make an improvement to your home, it’s essential that you check to see whether it would be covered under your existing home insurance policy.

Many upgrades and renovations will automatically be covered under your existing policy. There are others, though, that may require adjustments. This includes not just the installation of solar panels but also additions to your home that add square footage, a new pool or a major upgrade such as a kitchen remodel.

In all of these cases, it’s important to work with an insurance company you can trust that can walk you through all of your options.

At Signature Insurance, we have been providing coverage to homeowners in Michigan for years, helping walk them through all the different aspects of home ownership to ensure people are comfortable with the insurance they purchase. Contact us today to learn more and to get a free quote.