Solar Panel Insurance: What You Need to Know

WRITTEN BY: Mark Romero


Considering making the switch to solar? After reviewing how solar energy works, the pros and cons, and other things to consider, you’ll be able to make an informed decision. This information will also aid you in whether or not you’ll need to add solar panel insurance to your current home coverage plan.

Solar Power Information

While this clean energy is certainly an attractive option for many homeowners, it’s vital to understand a few things before making the leap. 

Do solar panels work?

Two technologies turn the sun’s power into electricity: photovoltaics and concentrating solar power. 

Photovoltaics (PV) are the panels you see on rooftops. The panels absorb photons when the sun shines onto the panel, which creates an electric field and causes electricity to flow. 

Concentrating solar power, or CSP, is the second type of technology. This is generally used for places like large power plants, not residential homes. CSP uses mirrors to reflect and concentrate light onto receivers that convert it to heat and electricity. 

What’s the average cost of solar panels for homes?

Solar panels may generate “free” electricity, but installation costs remain. Prices vary based on efficiency, capacity, and location. 

According to Consumer Affairs, the average solar panel installation cost in the United States is about $12,000 after tax incentives. You can also install a smaller system for around $5,000, while a Tier 1 system can cost $40,000 or more. 

How long does it take for solar panels to pay for themselves?

In the United States, the payback period for a well-designed and properly installed solar panel system is about eight years, according to EcoWatch. This may vary by location and homeowner but generally speaking, the payback period may fall between five and 15 years.

Advantages and Disadvantages of Solar Energy

Thanks to improved technology and competitive prices, solar energy has become a main energy source for many homes. However, there are always downsides to every energy source option. Before you make a decision, review the advantages and disadvantages.

Advantages of solar panels 

There are plenty of advantages to making the switch to solar energy. Not only is it pollution-free and offers renewable clean power every day of the year, but solar panels also offer many other benefits:

  • A safer, maintenance-free alternative to traditional energy
  • The option to heat water and even power cars
  • A return on investment (unlike paying for traditional utilities)
  • Reduced dependence on foreign oil and fossil fuels

Disadvantages of solar panels

Solar energy may offer numerous benefits, but it’s also important to consider the drawbacks before taking the leap. Below, are a few things to keep in mind before installing solar panels: 

  • High initial costs for material
  • Devices that run on direct current power are more expensive
  • A need for a large battery bank for nighttime energy
  • Lower energy production on cloudy days and winter months

Things to Consider Before Installing Solar Panels

Once you’ve weighed the pros and cons of solar energy, there are a few other things to consider about your unique situation before making the leap (and in some cases, purchasing additional insurance). 

Sunlight exposure

The amount of sunlight on your property will determine how much energy the panels will be able to produce. Also, keep in mind that the sun’s position will seasonally change, so you’ll want to ensure that your panels will catch an adequate amount of sunlight each season.

Run through the options with your technician to note any potential obstacles and plan the best placement possible. 

Power levels

Ask your technician to perform a home energy audit to determine the required output. This lets you know exactly what your panels will be expected to produce. Take note of your home’s size, the number of appliances, and the power output of your HVAC system. 

Remember: your solar energy should generate more electricity than you need. You can often sell the excess back to the power company. 

Panel placement

Once you’ve pinpointed the best sunlight exposure and received the results of your home audit, you need to decide on placement. Usually, the best place will be the roof. If that’s not possible, you may have to place them on the ground or in another location.

Does Home Insurance Cover Solar Panels?

Separate insurance isn’t needed, as many homeowners insurance policies include solar panel insurance coverage. Solar energy systems and rooftop panels are considered a permanent attachment to your property, similar to a patio. Note that some policies may exclude damage if it’s caused by a particular threat.

Should you increase your home insurance coverage after installing solar panels?

You’ll probably need to raise your coverage limits to account for any replacement costs. Solar panels are outdoors in elevated areas that are vulnerable to weather, so they’re at a higher risk of replacement and damage. 

Does solar panel insurance have claim limits?

There may be no claim limit involved. A claim limit is the maximum amount paid out for a loss that your policy covers.

Do you need a solar panel insurance policy if you don’t own the solar panels?

You typically won’t need to purchase coverage for leased solar panels. However, it’s imperative that you reach out to your solar company to check if they offer insurance in the event of an accident or a weather-related event.

Solar Panel Insurance FAQs

How long do solar panels take to pay for themselves?

Solar panels pay for themselves in about eight years in the United States. This can vary, but you can realistically expect your payback period to fall anywhere between five and 15 years.

Will my homeowner’s insurance go up if I get solar panels?

Not necessarily. However, you’ll probably need to raise your coverage limits to account for replacement costs. This will likely lead to a premium increase. 

How often do solar panels need maintenance?

Solar panels only require cleaning and an annual inspection as long as they’re working properly. They shouldn’t need any other scheduled maintenance throughout the year.

What’s the average return on solar panels?

A standard system will see around a 20% ROI in the first year. Some owners may spend more on their system, so payback periods vary. This can also depend on electricity usage and costs by location.

How long does a solar panel last?

The industry standard for a solar panel’s lifetime is 25 to 30 years. However, it won’t completely stop working. Instead, the output will significantly decrease from its original energy projection.

Solar Panel Insurance: A Review

Solar energy has benefits but is not the best option for every homeowner. However, if you’re aiming to install solar panels, you’ll first want to decide if you’d like to purchase them outright or lease them. This will be a key factor in whether you want to add them to your home insurance policy.