Solar Panels and Your Home Insurance Policy

Person in construction gear working on a solar panel on a roof

Homeowner priorities have been expanding in recent years. While the inside of the home is still their first concern, the add-ons are becoming more relevant than ever. Eco-friendly homes that can save people money are in high demand, and for good reason (in fact, some HOAs are mandating new builds have eco-friendly additions).

Solar panels are one of the most popular devices in this category. Not only are they not nearly as expensive as they used to be, but they can pay homeowners back tenfold. But how do you protect these investments? Are they integrated into your existing policy, or do you need to purchase something separate? We’ve got answers to all your questions below.

Key takeaways:

  • Most homeowners insurance policies cover solar panels. But depending on the type of system you have, you may need a separate policy.
  • Solar panels that aren’t a permanent fixture of your home are generally prone to more damage, so your insurance company may require you to purchase an insurance rider.
  • Solar panels cost an average of $13,000 after solar tax credits are applied.

Are solar panels covered by home insurance?

Most homeowners insurance policies cover solar panels. But depending on the type of system you have, you may need a separate policy. If you’re adding to the insurance coverage you already have, it’s essential to do your research. 

The location of your solar panels and your local climate could impact how much your insurance premiums cost. Generally, if your solar panel is mounted on your roof, your home insurance covers it under your dwelling coverage. But what if your solar panel isn’t a permanent fixture of your home?

When do I need a separate insurance policy for solar panels?

If you have a ground-mounted or carport solar panel, you may need an insurance endorsement. Solar panels that aren’t a permanent fixture of your home are generally prone to more damage, so your insurance company may require you purchase extra coverage. Additionally, suppose you live in a high-risk area (for example, where tornadoes or hurricanes are common). In that case, purchasing more coverage is a smart idea, and your provider may require it as well.

What damage to solar panels does home insurance cover?

Your home insurance covers permanent rooftop solar panels from all the same perils as the dwelling of your home. This means if a windstorm damages your roof and panels, or a fire destroys your entire home, you’d be able to replace your solar panels with minimal additional cost on your end.

Permanent rooftop solar panels will be covered from all the same perils as the dwelling of your home.

If your solar panels aren’t a permanent fixture of your home, it’s necessary to check your insurance riders to see if they cover your addition. Getting protection from disasters like hurricanes or floods may seem gratuitous but can be well worth it if the worst-case scenario happens.

Should I raise my coverage limits if I get solar panels?

To protect your initial investment in your solar panels, you may want to consider raising your dwelling or insurance rider coverage limits. This helps ensure that you have help when it comes to repairing or replacing your solar panel system no matter what comes your way. It’s imperative to understand what your policy does and doesn’t cover before increasing your premiums or adding an endorsement — to make sure you’re getting the most out of your money.

How much do solar panels cost?

The cost you pay for solar panel installation can vary depending on the kind of system you buy and where you live. As with any other purchase you make, it’s best to shop around before purchasing. According to EnergySage, solar panels cost an average of $13,000 after solar tax credits are applied. 

When comparing the cost of solar panels, it’s important to consider incentives as they can reduce the amount of money you end up spending significantly. The federal government has recently extended a renewable energy tax credit known as the investment tax credit (ITC). The ITC allows you to deduct 26% of the cost of installing a solar energy system from federal taxes in 2020 and 22% in 2021 (and there’s no cap on the credit’s value). 

States and local governments also offer financial incentives like cashback, property tax exemptions, fee waivers and rebates. Check the Database of State Incentives for Renewables and Efficiency to see what credits you could qualify for. But if you don’t want to buy a system outright, or if the price is a little too steep, you could get a solar loan.

Solar leases generally require no down payment and will cost you anywhere from $50 to $250 a month.

Some states offer solar leases and power-purchase agreements (PPAs) that allow you to rent a solar panel that a third-party company technically owns. You can either pay the company a monthly payment (with a solar lease) or pay for the power you produce (with a PPA). Solar leases generally require no down payment and will cost you anywhere from $50 to $250 a month (via Solar Power Authority).

What are the benefits of using solar panels?

There are a lot of benefits when it comes to solar panels. Not only do they save you a lot of money on your electricity bill over time, but they also help reduce your home’s carbon footprint and allow you to take advantage of solar credits from the national government.

Reducing your reliance on other energy sources is another benefit of purchasing solar panels. Solar energy can help you avoid rising utility costs dictated by fluctuating oil, coal and natural gas prices. Some places even allow you to sell additional power back to your utility company, letting you earn extra money on top of the amount you’re saving.

Speaking of added value, installing solar panels almost always increases your home’s resale value. The U.S. Department of Energy found that a solar energy system raises a home’s property value by $20 for every $1 in utility savings per year. Often, the added home value alone makes up for the money you spend on installation costs. Solar homes also tend to sell much faster, which can save you time and money when you’re ready to make your next move.

Exactly how much you’ll save by installing solar panels and how long it will take for your investment to pay off depends on where you live. In some states, electricity may cost only 8 cents per kilowatt-hour (kWh), while others charge more than 20 cents. Solar panels are more valuable for homeowners in areas with high electricity costs. This map can help you figure out the average cost of kWh.

When determining how much insurance you need, make sure to take into account all the additions you’ve added to your home, including solar panels. As your home’s value increases, so should your coverage amount. To learn everything you need to know about protecting your home’s new additions, contact a Hippo insurance agent. We’re here to help.