Solar Panels Risks and Insurance | Searching for Green

In my grandparents’ days, one would have to take care himself about his dwelling. But in today’s world, people usually pass some of the risks of day to day living to somebody else. That’s why we have so many types of insurance policies: home insurance, car insurance, life insurance and even pet insurance :-). Some forms of insurance are even mandatory by law (e.g. car) while others are mandatory de facto (house insurance, if you have a mortgage). So we may say that whatever your house, these days insurance is a must.

Sitting on the roof, the solar panels are at the mercy of the elements. However, they have some warranty which can be called if anything goes wrong. But adding solar panels on your roof adds some risks to the house itself:

  • water leaks: obviously, a roof with some holes in it is more likely to leak than one without holes, no matter what the installers do to prevent leaks. Flashing will certainly reduce this risk, but few installers are using it because of costs and increased install time.
  • hail: from my research, there seems that there are no known cases of damage to the panels because of this. However, my insurer mentioned it. And one of the solar panels manufacturers is advertising the fact that they are using thicker glass than the others. Why, if it’s no danger?
  • lightning: the panels on the roof should be properly grounded, but the effect of this is rising the “ground level” to the top of your roof, making it a slightly more likely target for lightnings. In a way, your panels will somehow protect your neighbor’s houses against lightnings. But in the admittedly improbable case that the panels take a direct hit, you cannot expect that nothing will break.
  • wind: again, it’s obvious that there is some wind load on the panels. It shouldn’t be a problem if they are properly installed, but there is some risk, nevertheless.
  • third party damages: if by any chance one of your panels becomes wind-borne in a century-rare storm (remember the one that hit Vaughan a couple of years ago?), it may land anywhere, like on your neighbor’s Mercedes rooftop. Or worse, it may injure someone.

To mitigate these risks you normally add the panels on your home insurance. If you already have an existing insurance policy, it may be even mandatory to call your insurer and let them know about the panels, otherwise your policy may become invalid. I advise you to ask you insurer for details!

In any case, adding the panels to your policy will usually bring a premium increase. From the stories I’ve heard and read, the quotes for this increase are all over the map: some companies charge nothing, some charge based on the solar system value, others based on the perceived risk increase, and finally some even refuse to insure your house if you install them. Personally, I don’t think the companies who refuse to insure your house will continue to do it for long. Most likely, they didn’t update their procedures. Probably neither did those who add no extra premium… the panels increase the risk for the insurers, and they will be quickly to adapt. It’s seems to me that this segment of the industry is still in growth pains. This is also clear from my experience.

First take: I called my insurer and the person on the other end of the line took only 2 minutes to give me a quote. I suppose their computers were already setup for such inquiries, and I was amazed. They asked specific questions, like the number of panels and their power, and immediately quoted the increase: $130/year, probably with HST on top of it, forgot to ask. I expected a much lower amount. After all, the premium it’s around $400 for the whole house, which means 0.2% of the replacement value! Apparently, although the solar system costs $26,000, the increase in the “insurable value” of the house is $60,000. To me, this means that from their point of view the added risks are higher than for  the rest of the house. I can somehow understand that the panels increase the risks more than their own value, since they can produce damages to other parts of the house.

Second take: after a while,  reading some experiences other people had with different insurers, I thought to call again. Another agent, another story! This time, he had to call the underwriter for the answer. After almost a month, I got my quote: $55/year for the same panels, which calculates to around 0.2%, basically the same as for the rest of the house. Just to note, this is also the default value in the Switch Kingston spreadsheet.

What’s to take from this experience? That you cannot be sure of anything until you see it on the paper! So make sure to get something in writing. At least, they may think twice about it…


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