Nov 09, 2025
How Roof Color Affects Home Energy Efficiency
Oct 31, 2025
Summary
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A solar panel system is a long-term investment with an expected lifespan of between 25 and 30 years. You can save around $50,000 on energy bills over that period.
It is a substantial economic benefit, but many homeowners still delay installing solar panels due to the high upfront cost and complications with home insurance.
Are solar panels covered by home insurance?
How much does home insurance go up with solar panels?
It is a high-value, permanent structure asset with high replacement liability. Inadequate coverage protection can wipe out your return on investment if the system is badly damaged. So, this article does not just address the question: Does home insurance cover solar panels? It serves as a comprehensive guide to help you with decision-making.
The Premium Increase
Installing solar panels does not automatically trigger a massive increase in your homeowners’ insurance premiums.
| If you are going with Solar Roof Installation (solar panels directly mounted to the roof or an attached garage), being classified as “permanent attachments”, your panels are covered under the Dwelling Coverage (Coverage A) section of your homeowners policy. |
Dwelling Coverage protects the physical structure of your house (including permanent attachments).
Policy requirements mandate that your Coverage A limits must equal the total replacement cost of the home. Adding a solar system increases the replacement cost of your property, increasing your dwelling coverage limit and annual premium.
This premium adjustment is relatively modest for the majority of residential installations, starting around $15 per month.
Risk Profile in NC, SC, and TN
The Southeast region, especially along the coasts of NC and SC, is inherently vulnerable to hailstorms, high winds, and hurricanes. Wind and hail damage are two common causes of solar panel failure.
This is why, in some high-risk regions, some insurance companies may mandate a separate wind and hail deductible specifically for solar panels. Others may completely exclude this type of damage from the standard policy.
You cannot rely on your standard HO-3 policy. You must confirm that your policy explicitly covers these risks for your panels.
Integrating Solar into Your HO-3 Policy
Defining Coverage
As already mentioned, roof-mounted solar panels fall under Dwelling Coverage (Coverage A).
Ground-mounted solar panels or panels attached to a detached structure are typically covered under Other Structures Coverage (Coverage B). Standard policies cap Coverage B limits, usually at 10% of the Dwelling Coverage (A) limit.
| For a home insured for $300,000, only $30,000 is allocated for Coverage B. So, if your system costs $45,000, you will bear the remaining $15,000 replacement cost out-of-pocket. |
For ground installation, you may need to purchase an endorsement to increase Coverage B to match the full replacement value.
Why Replacement Cost Value (RCV) is Non-Negotiable
Replacement Cost Value and Actual Cash Value (ACV) are not the same. RCV pays the repair or replacement cost for the damaged property using new materials of a similar kind and quality. There are no deductions for depreciation. ACV is based on the current value, factoring in depreciation.
| Valuation Type | Payout Mechanism | Example: $15,000 Loss, 10-Year-Old System | Suitability for Solar |
| RCV (Replacement Cost Value) | Pays full cost to replace new, without depreciation deduction. | $15,000 – Deductible ($1,000) = $14,000 Payout | Essential; guarantees full replacement value for this long-term, high-value asset. |
| ACV (Actual Cash Value) | Pays depreciated value (age, wear, and tear considered). | $15,000 – Depreciation ($10,000) – Deductible ($1,000) = $4,000 Payout | Avoid; results in significant financial loss due to high asset depreciation over time. |
Table: Replacement Cost Value vs. Actual Cash Value (ACV)
RCV provides the necessary financial security. Your RCV calculations must include:
- Base cost system
- Installation labor
- Permits
- Electrical upgrades
- A buffer (often 15%) for inflation
Risk Mitigation and Certification
Insurance carriers evaluate the equipment quality and resilience to foreseeable hazards for risk assessment.
Mitigating Severe Weather Risk
Even panels with shatter-resistant glass can crack from hail. Cracks can expose live wiring, leading to system failure and electrical hazards.
This is why insurers scrutinize your solar systems for their ability to withstand severe weather. Insurers rely on industry standards such as ASTM 1038 and/or IEC 61215 to quantify the resilience of a solar panel system. Use these certification standards for solar roof installation.
Fire and Electrical Safety Requirements
Integrating complex electrical components into your home structure increases the risk of fire or lightning-induced damage. Safety certifications such as UL 1703 and UL 61730 prove that your solar panel system is fire-safe. Local permits, anyway, require these certifications.
Operational Risk and Liability
Contractor Vetting and Licensing
Insurance companies also evaluate how it is installed. It is paramount to adhere to state licensing requirements. For example, in Tennessee (TN), a contractor must be licensed by the Tennessee Department of Commerce and Insurance for any job exceeding $25,000. Other states also require installation to be done by licensed contractors.
Licensed contractors are required to carry insurance that covers potential damage to the equipment or home structure during installation.
If an unlicensed contractor does the job, your homeowner’s insurer will not cover damages during installation because it is your negligence.
Understanding Workmanship Exclusions
Standard HO-3 policies do not cover damage caused by poor workmanship. Your claim will be denied if roof leaks or water damage occur due to improper sealing of roof penetrations during panel installation.
In this case, file a claim against your solar contractor, as their General Liability insurance covers such damages.
Always obtain a Certificate of Insurance from your contractor.
| Your HO-3 policy covers uncontrollable events such as storms and fire, while the contractor’s General Liability policy covers controllable risks such as the quality of work. |
Insuring Leased vs. Owned Systems
You are fully responsible for insurance if you own your solar panels. If you have acquired the system through a lease, the leasing company is responsible for the insurance.
However, you must meticulously review the contract terms as your home structure remains vulnerable to certain risks.
The leasing agreement may require you to increase your Dwelling Coverage limit or carry a specific liability coverage.
Closing Coverage Gaps
Solar Endorsement (Rider)
Your standard policy may not adequately address specific risks in solar systems, such as seepage, leakage, or specific equipment malfunctions. Insurance companies offer riders or endorsements to bridge these gaps. One good example is the costs associated with the Removal and Reinstallation (R&R) of panels during covered roof work.
Cost of Removal and Reinstallation (R&R)
When you undertake roof installation services or repair services, removing and reinstalling solar panels can cost you between $6,000 and $9,000. Your standard insurance may not cover this labour cost. You can purchase a specific solar endorsement to bridge this gap.
Umbrella Policies
The presence of a high-voltage, complex system on your roof can lead to home fires, structural damage, or severe electrocution injuries. North Carolina recognizes this elevated risk and mandates a minimum of $100,000 in liability coverage per occurrence for grid-connected solar PV systems.
Toxic runoff from damaged panels poses environmental liability. So, $100,000 may not be adequate. Supplement your HO-3 liability with an umbrella insurance policy for protection against severe, catastrophic liability claims.
Optimal Solar Insurance Checklist
Be proactive in managing the insurance implications of a solar installation.
- Make sure you hire a licensed contractor.
- Always ask the contractor to provide proof of General Liability Coverage.
- Ensure equipment certification.
- Keep all records, including purchase receipts, invoices, permits, and warranty documentation, as they help establish the Replacement Cost Value (RCV) when filing a claim.
- Ensure proper maintenance to comply with manufacturer warranties and support insurance claims.
- Get a discount by bundling your homeowner’s insurance with other policies.
- Increase the deductible to reduce your annual premium.
- Ask your insurer about discounts for energy-efficient upgrades or equipment.
Conclusion
So, are solar panels covered by home insurance? Your solar installation insurance depends on where you are mounting your system. Just keep in mind that you should opt for Replacement Cost Value and always hire a licensed solar contractor. Don’t forget to address your coverage gaps.
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Frequently Asked Questions
Go for RCV because it pays the full replacement cost for materials of similar quality, with no depreciation deduction. ACV, on the other hand, pays the current value.
Your increased Dwelling Coverage limit must cover the system’s full replacement cost. The estimated cost depends on various factors, such as regional risks. However, it does not lead to a significant increase in your premiums.
Ground-mounted panels are covered under “Other Structures,” which is limited to only 10% of your primary house coverage. You need to buy an endorsement to cover the full value of your system.
Not always. You may need an endorsement to cover removal and reinstallation costs.
