Solar Panels and Home Insurance

Fran
Sherry Lin
May 10, 2019

Renewable energy is no longer a trend as our global warming problem evolves into a global warming crisis. With the introduction of the Green New Deal proposal, climate change no longer remains a myth. California is taking the initiative into the renewable energy transition by being the first state in the nation to require solar panels for new homes. Going into effect on January 1, 2020, the California Building Standards Commission unanimously voted to require solar panels on homes up to three stories. Many homeowners have opted to invest in solar panels of their own accord as well. If you’re considering solar panels for your home, there are a lot of things to look at before making the big decision. After all, they don’t come cheap! Here are a few for starters:

Savings with Solar

Solar panels have the potential to save your money’s worth and more on utilities over the years. Your total solar system cost is the cost of installation and any added electricity costs in the event that your panels do not completely offset 100% of electricity bills. Although it’s a pretty big investment upfront (an average of $17,359 in California after tax and rebate), the long term savings can offset the cost by almost double. The average family in the United States spent around $1.335 per year on electricity. With a utility inflation rate of 2.2% per year, you’ll be locking in energy costs at a constant rate with solar panels. In 20 years, you can save an average of $21,000 in Costa Mesa, CA.

Of course the amount you save varies depending on a number of factors. Looking at your home alone, you need to consider how many direct hours of daily sunlight you get, the size and angle of your roof, and most importantly, your local electricity rates. Being under the shade of trees and facing away from the sunlight might keep your home cool during hot days, but it will drastically limit the amount of sunlight you get. In that case, installing solar panels might not be a good idea. You want high efficiency to maximize the use you get out of them.

The time of year also affects how much energy your solar panels will provide. The amount of sunlight you get in the summer is 2x the amount you get in the winter, so keep that in mind when you plan on installing your solar panels. You might not see monthly savings immediately and have to wait a few months before they start rolling in. Even with solar panels, you’ll still get a monthly utility bill that shows how much of your usage is offset by net metering credits. If you provide more electricity to the grid than you used, the credits will roll over to the next month.

Insurance

Since solar panels are such a big investment, you need to make sure they’re insured in case anything happens. Luckily, many homeowners insurance cover residential solar energy installations as part of a standard policy. It protects your panels against perils like theft or damage from wind or fire. For separate systems like carports or ground-mounted panels, you made need an add-on or separate policy. You may also want to review your coverage limit and deductible and make sure your policy offers enough coverage to help pay for repairs. Get quotes from multiple insurance companies and talk to several agents before deciding on what to do.

If you are leasing your panels from a company or through a power purchase agreement (PPA) you are not the owner of the solar system. The company whom you have the agreement with owns the panels and is responsible for maintaining them. Be sure to carefully examine the lease or PPA before signing ensure the company is providing adequate protection.

Increase Home Value

With solar panels, your home value will increase. Depending on your location and system, you could potentially up your home value by 3-4%. You can enjoy electricity bill savings over the lifetime of your panels in 20-30 years, and they will grow with the utility inflation over time. If you do sell your home, you can fetch a higher premium which covers more than the upfront cost of installing solar panels. The solar panels will increase home value only if you own the system. If you are leasing or signed a PPA with a company, the system is rented from a third-party owner. It cannot be included in assessments of your home’s value.

Solar system technology has drastically improved over the years. As more solar companies are founded, the price of solar systems will decrease and become more stable. Homeowners should start considering how to incorporate green energy into their everyday lives. Overtime, the benefits of going solar will outweigh the upfront cost of installing the system. But, the long-term savings is only the icing on the cake from making the world a more sustainable place.

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