For the deeply religious and somewhat comical Ned Flanders of The Simpsons, insurance was a form of gambling, so he didn’t insure his house. When his house burned down, and he was forced to move in with Homer, he quickly became very conflicted about his values.
For the vast majority of us, insurance is a necessary evil. The true gamble is not having insurance, and it can be a very big gamble indeed.
Imagine your million-dollar home is razed to the ground, and you’re not covered. Imagine a truck reversing into your brand-new SUV, and it wasn’t covered. The thought makes us shudder.
Hence, we insure, and it costs us plenty. We insure our lives, our homes, our cars, our health, our boats, our businesses and our bikes, and the money-chewing (blood-sucking) list goes on and on. In fact, we spend huge sums on insurance. Australians spend over 21 billion on health insurance alone.
So, you’ve just added (or about to add) a new solar array to the home, with all of its high-tech looking solar cells, including the whiz-bang peripherals—the dials, knobs, fancy backlit gauges and the like. Looks like it's something you should insure, yes? Well…yes. Ummmm, maybe … it depends.
Yes, we’ve said it again. It depends. We say it unashamedly, of course, because the solar world is relatively new. That’s why we do these articles, to get you clued in and keep you there.
Many aspects of solar have yet to hit the ‘black and white’ of common household knowledge. Regulation in many areas is yet to be set and precedent for many aspects of domestic solar are yet to make their way into law.
Add something like insurance to the solar equation and you have a true recipe for the perfect ‘grey area’. While insurance is very black and white to the insurer, for the insured, it’s deeply grey, like cross your fingers and hope grey.
Only the extremely conscientious know the deep inner workings of their insurance policies—the fine print, and the extremely fine print, including that which they simply don’t print.
We do our best to get a grip on our insurances, but for the most part, policies are very complicated and loaded with ‘exclusion clauses’ we simply don’t understand, let alone retain in our memory.
This article is about trying to bring some definition to the grey and adding a touch of definitive black and white to an area that is already confusing for some of us (solar), and to an area that is totally confusing to the majority of us (insurance).
In short, do I need to insure my array? Is it covered automatically under my current policy? What happens if aliens steal my solar panels? What if they damage them, hovering their spaceship over my array?
Firstly, before we go there, a serious word of warning. There is no way you can avoid a chat with your insurer. Reading this article will certainly provide a very worthy heads-up for all of your concerns but ultimately …
Only written confirmation from your insurer can be relied upon. And we don’t mean advice from the consultant over the phone. Where insurance is concerned, get it in writing. OK, got it? That wasn’t a cop-out disclaimer by the way, just really really good advice!
There are countless insurers and policies vary, in some cases profoundly. Check with your insurer. What you are about to read should be considered as ‘generally speaking’.
Is My Solar System Covered, or Do I Have to Do Something to Have it Covered?
Your main dwelling roof-mounted array, including the bits and bobs that allow it to function, are considered by insurers as part of your home. They are not contents, but indeed part of the home itself.
Note we said “main dwelling roof-mounted’ array. If your array is mounted somewhere other than the roof of your main dwelling, such as on the ground or on a separate garage, for example, things are different. We’ll address this later.
A great way to understand that which is deemed part of the home and that which is deemed contents is simple.
If you were to turn your house upside down, everything that falls out is contents. The rest is considered part of the home. As your solar array and its peripherals are fixed to the home, they come under your home insurance, not home contents.
Generally speaking, if you are insured with any of the big household name insurers, your array will be covered if your home burns down or any other such disaster. If your home is covered for the disaster that befalls you, your array is covered also.
There are examples of insurers that set aside a certain dollar value for ‘green technology’ installations, such as solar, wind, and water tanks and the like.
Allianz, for example, will give you $5000 in total for your renewable technologies in the event of disasters. Thanks, Allianz, what happens when my renewables technology is worth $35,000?
Clearly, this is an example of useless insurance and a big heads-up about asking the right questions of your insurer.
If you had asked, “Is my solar array covered?” The Allianz consultant would have said, “Yes.” You would need to ask, “How much is it covered for?” to avoid problems.
The Allianz example seems to be the exception here. Generally speaking, when you tell your insurer you have a solar installation, they make a note of it, but it is automatically covered.
What you need to decide is if you have to increase the insured value of your house to include replacement of your solar system.
For example, your solar system cost $25,000. You have been advised that your solar array has increased the value of your home by $25,000 also. The value of your home has effectively jumped $50,000.
To ensure you get that money/value for full replacement, including the added property value the system provided, you would more than likely have to increase the sum insured— i.e., the insured value of your property.
For the most part, this shouldn’t be a problem depending on the insurer, however, your premium is sure to go up accordingly. Fifty grand is a 10% jump on a home valued at $500K. A premium jump, in this case, is almost assured.
To sum it up, adding a solar array to the roof of your main dwelling, with all of its peripherals mounted in the main dwelling, will see it automatically covered by your home insurance. Call your insurer to confirm, and ensure they make a note of it on your policy.
It’s up to you if you wish to increase the sum insured. Again, if you have invested a significant sum in your system and it has added value to your home, it may be prudent to consider upping the insured value. Of course, you have to weigh this up against any premium increase.
We’re Mounting the Array on the Garage—It’s Separate to the Main Dwelling
For varying reasons, people will mount their arrays on a separate building on the property, such as a shed or garage. The majority of home insurers do not automatically cover things such as storage sheds, garages, granny flats and the like. They need to be insured under a separate policy.
In this case, you will have two options. Insure the entire edifice on which the array is mounted or insure the array separately. Both are not without their problems.
Insuring the Entire Edifice
This might be an expense too far. Essentially, you have not bothered ensuring this building before you mounted the array. Now, to insure your array, you are paying an insurance premium on a building to support the cover of your array.
In some circumstances, this may be viable, but you will have to do the sums. You may well wipe out the savings provided by your solar array in insurance premiums.
This may be a viable option if the building is already insured. Granny flats are a great example of this. If the building is insured, your array will be also.
Be mindful of course that your solar peripherals, such as the inverter and battery etc, may well be attached to the main dwelling. Of course, these would be covered under your home insurance policy. It’s just the panels that would not be covered. Again. Check with your insurer.
Insuring the Array Alone
You may be in a situation where your array is mounted on the ground, or you don’t fit easily into any standard tick-a-box insurance.
If you have invested significant sums and wish the array to be covered, your best option here is to contact an insurance broker.
The big insurers we see advertising on the TV ad nauseum are less likely to take on ‘out of the ordinary’ risk. However, you can insure anything—for a price. The best option here is to speak with an insurance broker.
These firms are best placed to search out insurance companies that insure things and situations that are a little out of the ordinary. Be prepared for a reasonable premium, however. Remember, do the sums. You don’t want to wipe out your solar savings on insurance.
What About Panel Damage from Wind, Installation Errors, Hail and the Like?
If a tree comes crashing down through your rooftop solar panels, your home insurance should cover this. Remember, your panels are deemed as part of the house, and therefore covered.
It’s the same deal with things like hail and wind. As they are part of the house, they are covered under your home policy.
If a small internal fire damages your inverter or battery, or other peripherals, they too will be covered as they are part of the house. Again, you must check with your insurer as policies and cover can and do vary significantly.
In the very unlikely event a fire was caused by the inverter, battery or the solar panels, that may be a different story. In this case, your warranties can come into play. Your insurer will definitely check the quality of the installation of your system, as well as the quality generally.
Here is one thing you can definitely count on: if, following an ‘incident,’ your insurance assessor finds a defect in the equipment, irregularity, or non-compliance with installation, they may deny any claim and refer you to your solar warranties.
Take this as an important heads-up. Understand your solar warranties inside out. Use a reputable, long-standing solar installer. If you are making a claim to an installer that is no longer in business, they don’t have to honour the warranty. You could find yourself in a real pickle.
Remember, if your solar system breaks down in any way—i.e., it malfunctions—this is not an insurance issue. It is a warranty issue.
My Insurer Won’t Cover My Solar System
In the very unlikely event that your insurer will not cover your solar system, seriously consider changing your insurance provider. If you can’t do this but you still want insurance, call a broker.
They will no doubt find insurance for you BUT MAKE SURE YOU DO THE MATHS. It may turn out to be a false economy. Remember, it’s insurance. It’s all about ‘just in case’. Most of the doom and gloom events mentioned are highly unlikely to occur anyway.
If the premium wipes out your solar savings, it may not be worth it.
Most of us will not have to do anything insurance-related when we install our array. Your array and all its peripherals will be covered under your home insurance automatically by the majority of insurers.
Some of us who have spent big on an array and also added value to the home may wish to consider upping the sum insured. Talk to your insurer. They will more than likely oblige—along with a premium increase, of course.
If you’re completely risk-averse, insist on insuring your system, and have a situation where the array that is not covered under your home policy, such as a ground-mounted system, talk to an insurance broker. These people will point you in the right direction for appropriate insurance.
Your new array not only reduces your carbon footprint, it’s going to save you money. Take care when making insurance decisions that you are not wiping out your solar financial gain via insurance policy premiums.
Here’s a tip. When you’re talking with insurance companies, don’t be in a hurry. Send your queries and detailed questions via email. The advice they provide in writing holds significant weight.
Here’s another tip. You’re installing a new solar system. This is an exciting time and a wise investment. Don’t get bogged down or disheartened by the process of dotting i’s and crossing t’s.
Do your own research, but also seek professional advice. Insurance can be complex, but it needn’t be. Inquire in writing for a written response so you can proceed with confidence.
By the way, if an alien does land on your fancy new array crushing it to bits … you’re on your own.
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Otherwise, head back to the solar blog to find even more great educational content.
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