Adding Solar Panels? Call Your Insurance Agent First.

February 5, 2018

Adding solar panels like these to your home?Thinking of adding solar panels to your home this spring? You’re not alone…

The groundhog just predicted another six weeks of winter, which is bad news for thousands of New Englanders who’ve already been hit by steep electric bills. According to projections from the state’s Department of Energy Resources (MassDOER), homes heated by electricity are seeing the average cost of the heating season rise by more than one thousand dollars—from $6,102 last year to $7,188 this year. Talk about a harsh winter.

Reining in some of that expense is reason alone to consider solar power, but there are others, too: federal or Massachusetts energy tax credits, the resale value of your home, and don’t forget the obvious benefit of doing something smart for the planet. Alternative energy experts say that just one residential solar system can offset 178 tons of carbon dioxide (over the span of 30 years), which is about as earth-friendly as planting ten football fields full of trees.

But adding solar panels doesn’t just affect your utility bill. Before you agree to buy or lease a solar panel system for your home, don’t forget to call a local insurance agent. (We’re available at 508.339.2951.) Here’s why:

Adding Solar Panels Affects the Value of Your Home

Your homeowner’s insurance rate is based on the cost of replacing your home—in other words, the amount of money needed to rebuild your house with the same materials and features it has today. Since solar systems often cost tens of thousands of dollars, their addition significantly increases your home’s replacement value. Just as if you’d remodeled your bathroom with marble or swapped out your old windows for triple-insulated glass, your insurance agent needs to know the details of your solar arrays, inverters, and other system components.

Adding Solar Panels Is a Major Project

In Massachusetts, solar panel system installation requires the same local approvals as any major building or electrical project. The system installer will need to pull building and electrical permits, and the project itself will be subject to inspection. Before you sign any contracts, ask to see a certificate of insurance (the company’s insurance agent should be able to fax or email you current proof of general liability coverage and workers’ compensation coverage). In addition to making sure your installer is properly insured, you may want to ask if he or she is certified by the North American Board of Certified Energy Practitioners (NABCEP). You can find Massachusetts-based installers with NABCEP credentials through this locator tool.

Adding Solar Panels May Create New Risks

For all their many positives, solar panels can also be extremely dangerous. Each panel is “live” with electricity, creating serious risks of fire or electrocution on/around your property. If panels are mounted to your roof, they may be damaged or dislodged by severe weather. If they are ground or pole-mounted, they could be considered an “attractive nuissance,” which means they invite the possibility that a child might try to climb/play near them.  It’s important to discuss new perils and liability concerns like these with your local insurance agency.

Adding Solar Panels and Net Metering

If you’re planning to sell excess energy back to the utility company (net-metering) for a credit, you need to be aware of additional, related liability issues. According to the National Association of Insurance Commissioners, “most governmental bodies either require or strongly encourage homeowners to acquire and maintain additional liability insurance while their energy contract is in force. Be aware that municipalities might require you to reimburse it for any loss arising out of net-metering incidents that harm their workers or damage their property.”

A certified solar installer will be able to explain the level of liability insurance and indemnification provisions required by your utility company and your city. Experts say coverage recommendations will likely range from $100,000 to one million per occurrence. Your insurance agent can tell you whether or not the liability portion of your MA home insurance excludes coverage for net-metering-related loss events. If yes, obviously, this needs to be addressed.

As always, keep in mind that every insurance situation is different. And certainly these are not the only factors to weigh when deciding if/how to leverage solar power. Adding solar panels to a commercial structure may also be different. Please give our team a shout if you have any questions!