Call your insurance company before solar panel installation

The Honest Broker: Call your insurance company before solar panel installation

BY: DIANE LOTT

PARADISE FOUND REALTY, INC.

Homeowners that consider adding solar panels, study energy savings and break-even costs, but they should also call their insurer because some will increase premiums, and some will cancel policies. As electric bills surge and the federal government offers generous tax incentives for renewable energy investments, more and more Florida homeowners are seriously considering rooftop solar systems.

But in calculating system costs vs. electric bill savings, many would-be solar owners are neglecting to consider how a solar system will affect their home insurance bill – or how difficult it might be to find a company that will insure them at all.

As insurance premiums skyrocket for all Florida homeowners, solar customers who obtain coverage might also find that the price increase will wipe out any energy-cost savings they expected from going solar. Another result can be the cancellation of a policy once the insurance company sends out an inspector. Reasons for cancellation can include roof age or a tile roof.

Solar installers, solar energy advocates, and insurance agents cite other reasons insurers won’t cover rooftop solar systems as well. Insurers who do business in Florida offer a wide variety of reasons for refusing to insure homes with them.

Net metering flagged by insurers

Increasingly, insurers are claiming that solar systems with net metering connections to utilities – which is virtually all of them in Florida – pose a unique risk of injury to line workers and damage to the utility grid. Florida Power & Light’s net metering contract requires homeowners to take responsibility for all potential damages. In essence, if there’s a surge running through the panels that causes damage to the grid or other homes, the client is responsible.

Many insurers who operate in Florida, faced with mounting losses, have been dropping or not renewing policies to reduce the amount of overall risk they carry on their books of business. In some cases, state insurance regulators have ordered insurers to shed policies so they can afford to purchase reinsurance – insurance that insurers must carry to be able to pay all claims after a catastrophe. However, advocates state that the potential dangers of back feeding are exaggerated and say, at least one potential customer a day reports their insurer could not guarantee they wouldn’t be dropped if they installed solar.

Some insurance companies have told homeowners that net metering turns them into commercial utilities, and they are no longer eligible for homeowner insurance policies, or that having solar panels increase exposure for damage due to wind uplift when attached to a roof, increased exposure for wind or hail damage to the solar system itself, fire hazards from loose or poorly connected parts or wires, increased risk or electrocution, presence of toxic materials and byproducts of the panels themselves, and potential liability associated with back feeding to the grid.

Companies that do continue to insure rooftop solar systems are allowed to set strict conditions for that coverage including: only covering homes with solar systems that were installed after 2016, on shingle or metal roofs no older than 10 years, on flat roofs no older than five years, and produce no more 10 kilowatts of electricity, which is more or less the typical rooftop system capacity.

Some companies will not insure solar panels on tile roof homes due to the challenges presented by the attachment of the panels to the roofs. Most tile roof installations require attachment brackets which must pierce the tile roofs. Although experts state that solar panels are routinely installed without piercing tiles and that many installers remove clay tiles at the point where solar posts attach to the roof and replace them with aluminum tiles that won’t break or crack when drilled.

Nevertheless, rooftop solar consumers can expect to find a hodgepodge of insurance rules unless and until the state Legislature decides to enact common coverage standards.

Common standards for insuring solar?

The national trade organization Solar Energy Industries Association is working with fellow solar advocacy groups Florida SEIA, Solar United Neighbors and Vote Solar to reach out to insurers and try to develop legislation to eliminate confusion about insurance practices.

The good news for solar owners is there are insurers that do not prohibit coverage of homes with solar systems or impose a long list of restrictions on coverage. They include state-owned Citizens Property Insurance Corp., the so-called “insurer of last resort.”

Citizens covers solar systems as part of the structure without special endorsements or add-ons required and just be added into the replacement value of the home. Of course, adding solar panels increases the value of a home, so homeowners can expect to pay a higher premium when they add solar.