Impact of Solar Panels on Homeowner's Insurance

When it comes to installing solar panels on your home, a question that frequently comes up is: How will this investment impact my homeowner's insurance policy? The truth is that the answer isn't cut-and-dried, as it tends to vary based on the insurance company you're with, and even from region to region in the country.

What's usually consistent, though, is the classification of solar panel systems by tiers. If your installed system is considered a Tier 1 system—meaning it is under 11 kilowatts in capacity—then you're in luck. Most times, your standard homeowner's insurance policy should automatically provide sufficient coverage for your solar panels, and no additional steps are necessary.

However, should your system exceed this limit and thus be classified as a Tier 2 system, the requirements change somewhat. In this scenario, you'll often find that power companies mandate that you carry a general liability insurance policy with a coverage of at least one million dollars. This doesn't mean you have to start from scratch with a new insurer. This specialized coverage can typically be added onto your current homeowner's policy.

Interestingly, shopping around can pay off if you're looking to add this coverage. While some homeowners report being quoted an additional $700-$800 per year to extend their existing policies, more cost-effective options do exist. For instance, some insurance agents specialize in solar panel coverage and can provide the same level of insurance at a much more attractive rate, somewhere between $150-$200 annually.

Remember, though, this is assuming your system requires the enhanced coverage associated with being a Tier 2 system. For standard-size installations that fall below the Tier 2 benchmark, rest assured that your regular insurance policy likely has you covered without the need for any modifications.

As always, the best course of action is to get in touch with your insurance provider for personalized advice and to explore your options in-depth. They can help clarify how your particular system will affect your policy and what steps you may need to take to ensure you are fully protected.