Are solar panels covered by my homeowners insurance policy?
We are getting calls weekly on this topic. Solar Power companies are pushing to get the panels on roof tops promoting energy savings and tax breaks, but at what cost? Products and/or services sold door to door often have a catch or pitfall. Many times the salesperson wants an immediate answer with little time for research and due diligence.
Three main areas of concern: Cost, Maintenance and Homeowners Insurance.
First of all, there is the cost factor.
Our clients have told us that they are financing these panels over 5 years at a cost of around $300/mo for some clients. The inquiries are for newer homes which for the most are already energy efficient, as a result the savings is going to be far less than an older less efficient home. For a home built in 2015, 2600 sq ft of living the electric bill did not break $300/mo. This includes when my wife and kids were home for the summer. Winter months averaged around $150-$170/mo., for instance.
Given the above information:
Total Solar Panel Cost: $18,000
Average Electric Bill: $200/mo
Savings from Solar Panels:(1/2 of electric bill) $100 x 12= $1200/yr
Total Yeas to offset savings: (Back to even) 15 Years
As you can see by the above information the payoff is not be what some people have imagined.
The second area of concern is dealing with the ongoing maintenance of the panels themselves.
We have reviewed contracts where there is only a 1 year warranty. What happens after a year? Solar is a newer technology making parts and service technicians difficult to locate. Certainly, there will be a warranty company in the future that will sell a contract for this just as there are for appliances and automobiles.
Life expectancy is approximately 20 years according to some companies. Given the cost of the initial system and the potential to have the panels replaced in 20 years what is the estimated actual savings over time?
Lastly, and likely the most confusing is the are of Homeowners Insurance.
- How does my home policy cover the panels? The solar panels be excluded?
- The carrier could be void the policy?
We have come across three common scenarios for these panels.
- Heat the pool only.
- Heat/cool the home.
- Generate power back to the grid in addition to heating/cooling the home..
Each carrier’s policy and coverage will vary. To be sure, check with your current Homeowners Insurance provider. American Integrity, for example will offer coverage for #2 above. #1 and #3 will be excluded along with any damage the panels cause during a claim.
The bottom line is….make sure you do your research. Are you in this for the long term? What happens if I sell my home? Does this help or hurt the value of my home. There are many questions that need to be answered before a decision should be made.