Damage to residential solar panels is typically covered by homeowners insurance, but your coverage may be impacted by where on your property they’re located.
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The price of rooftop solar panels has fallen by about 55%  since 2010, helping make solar energy a popular and competitive form of electricity. But despite these encouraging trends, residential solar panel systems still go for around $20,000, so having to replace one in the event of fire or storm damage could set you back a bit financially.
Fortunately, solar panels are covered by your homeowners insurance policy, so you won’t have to worry about paying for a new system entirely out of your own pocket. To ensure that your solar panels are fully protected, be sure to review your coverage limits. Also known as your policy’s “limit of liability,” this is the maximum amount that your insurer will pay out for a covered loss. If you recently installed rooftop solar panels, you should make sure your coverage limits were updated to reflect the home’s higher rebuild value.
Homeowners insurance generally covers damage to solar panels if the cause of the loss is covered by your policy
Installing solar panels will likely increase your home’s rebuild value, which can lead to higher homeowners insurance rates
Some utility companies in Florida, Wisconsin, Minnesota, and a handful of other states require that solar residences have a certain amount of liability insurance. This is to cover the utility’s liability in the event that the customer’s system causes injury or property damage
If your utility company requires more than $500,000 in liability insurance, you’ll likely need a personal umbrella policy in addition to the liability coverage in your homeowners insurance
Yes, most insurers cover solar panels as long as the cause of damage is covered by your policy. That means if they’re damaged by wind, fire, lightning strikes, hail, or a fallen tree, you’d likely be covered for solar panels repairs or a new system. Keep in mind that before getting a payout, you’ll first have to pay your policy deductible. This is the out-of-pocket amount which you’re responsible for paying before your insurance kicks in to cover the rest.
Most insurance policies will cover solar panels in one of two ways, depending on if they’re attached to your home or somewhere else on your property.
If you have rooftop solar panels on your home or an attached garage, for example, they would be covered under the main dwelling portion of your policy. Dwelling coverage not only protects the structure of your home — it also covers anything that is permanently attached to it. A patio, HVAC generator, security system, solar panel system, and anything of the like would qualify as a permanent structural attachment.
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 the other structures portion of your homeowners insurance. Your other structures coverage limit is usually a percentage of your dwelling coverage limit — usually 10% but higher limits are sometimes available depending on the insurer. If you’re installing solar panels on a detached garage or shed, or mounting them to the ground in your backyard, consider upping your other structures coverage limit.
In a situation where your solar panels aren’t covered, your insurer may offer optional solar panel coverage, or an endorsement, that you can add to your policy for a fee.
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Homeowners insurance will cover your solar panels from the same types of damage and loss that the rest of your home is covered against. Causes of solar panel damage that are covered by your policy include:
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.
While solar panels don’t directly lead to higher rates, adding them to your home may require you to increase your coverage limits or add protection to your policy to be fully covered — and this can cause your insurance rates to go up.
Improvements and renovations — including solar panel installation — typically increase a home’s replacement cost, or the full rebuild value of the property. Since your policy’s dwelling coverage limit should be equal to the replacement cost of the home, your rates will likely increase once you update your policy to account for the 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.