Anyone financing a home knows that the bank wants to see there is adequate insurance on the property. Unfortunately, what is satisfactory for a lender may not be satisfactory for the owner. Homeowner policies contain a sea of coverage and exemptions which are sometimes difficult for policyholders to comprehend. If an improvement to the structure or a major fixture is installed, there might be some question whether the standard hazard policy will apply to damage in those areas. Owners should be aware and not assume that their current policies are satisfactory. Those with solar panels, however, can take some comfort in the knowledge that many programs include these energy-saving devices.
Solar Panels Are a Major Investment
There is a reason that solar panel producers say that these cost-saving measures will pay for themselves. The fact is that upfront costs are real. According to Forbes, the primary material used to create panels is silicon, the same substance used to make computer chips. Although silicon is an element in the earth’s crust, it is not readily usable in its raw form. Silicon must be extensively refined. Silicon disks—or wafers—are most often infused (professionals use the term “doped”) and coated by a phosphorous covering and then organized into cells. The cells are then mounted on a photo voltaic panel and backed by metal strips to conduct the heat from the sun.
With materials and manufacturing requiring so much financial advice, it is little surprise that solar panels cost what they do. Realtor.com estimates that the standard 5-kilowatt solar package runs about $18,500. Not only is this a large amount to part with, it is also a tremendous risk for an insurer to cover. The question is whether a homeowner, having spent for purchase and installation, is willing to take the budgetary hit in premiums for added insurance coverage. On the other hand, will the owner risk leaving such a capital cost uninsured? The good news is that such a choice may not be necessary.
Policies Favoring Solar Panels
Many insurance providers treat solar panels as they would a home security system or a balcony: as a permanent attachment to the property. Because of this determination, the panels are considered part of the house, and therefore subject to whatever benefits apply to damage from fire or the elements (flood always requires a specific and separate policy). This is in contrast to property separated from the house, like a detached garage or storage structure, which normally receives only 10 percent of replacement cost from standard home insurance coverage. This is cause for relief for many cost-conscious property owners seeking to cut their energy bills.
There are caveats to such indemnity. For example, while wind and rain damage are common claims against standard homeowners policies, hurricanes and tropical storms may carry a higher deductible payment and lower limits on compensation. Those who live in states are more often subject to hurricanes do well to check how expensive replacement of solar panels would be.