Nearly a year ago, California became the first state to mandate that all new homes have solar power.1 The regulation becomes effective January 1, 2020. Under the new rules, individual homes must have rooftop solar panels or share a solar-power system with a group of homes. According to the New York Times, the California regulation is expected to add $8,000 to $12,000 to the cost of a new home.2 Predictions are that the solar power will save heating and cooling costs as much as $80.00 a month, not to mention a positive cut to greenhouse gas emissions. Before taxes, an installed rooftop solar energy system can cost anywhere between $15,000 and $25,000 depending on size of kilowatts. Only time will tell if the economic advantage of having solar panels will outweigh the upfront costs of installation.
The obvious question that follows from the above information is: are solar panels covered by homeowner’s insurance? The answer to that question is “yes” it’s included in most homeowner’s insurance policies because most solar power panels are considered a permanent attachment to the home like a deck, security system or a patio. However, in some coastal states which experience frequent hurricanes and damage due to wind and flooding, solar panels may not typically be covered in the standard home insurance policy. In those states (coastal mainly) where there are numerous windstorms, hail storms or hurricanes, there are separate policies (like flood) from the standard homeowner’s insurance policy to cover solar power panels. These states include: Alabama, Connecticut, Delaware, Florida, Georgia, Hawaii, Louisiana, Maine, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Texas, and Virginia.
With an increase in a home’s value with solar panels, comes an increase in premiums in most cases. Researchers that have investigated this issue recently, generally agree that the replacement costs associated with solar panels would likely result in an increase of homeowners’ premiums. However, installation may be worth the increase in premiums—for example, in California, where the installation of a 5kw (kilowatt) system, may see an average of $29,555 added to the retail value of a medium sized home. The National Renewable Energy Laboratory (https://www.nrel.gov/docs/fy08osti/42733.pdf) figures the increase in home value in a little different way: its research has found that for each additional $1 in energy bill savings from the solar system, will add $20 to the home’s total value. Solar panel systems can be an excellent investment, reducing electricity bills while increasing the value of a home. For additional information on how solar panels will add value to a home, go to: https://www.costofsolar.com/is-my-home-worth-more-with-solar-energy/.
The important thing to remember if you are considering adding a solar system to your existing home or purchasing a new home with a solar system: Don’t forget to call your insurance agent and/or read your existing homeowner’s policy (best to do both) to learn if such a solar system is covered or if you have to add coverage or raise the dwelling protection limits of your policy.
1 This new regulation was approved by the California Energy Commission on May 9, 2018. See https://smithsonianmag.com/smart-news/California-homes-built-after-2020-will-be-required-have-solar-panels-180969050/.
2 Id.; In 2018, the California Association of Realtors predicted median home prices would increase to $561,020 in 2018. For comparison, the median price of a home in the US as a whole in 2018 was $337,200, The addition of solar panels in California is predicted to drive up the cost of each new home housing market by about $10,000.