As more and more homes are being contacted by solar energy firms offering ways to cut utilities expenses, one has to wonder: How will this affect my homeowners insurance?

There are two ways by which solar companies contract with homeowners; one is to sell the solar panels outright; and the second is to lease them. There are insurance implications of both.

In the first scenario, if you buy the panels outright and permanently install them on your home, they become part of the dwelling. Since they become part of the dwelling, you would have to increase your insurance coverage to reflect the additional value of your home due to the panels. If the panels are installed permanently on your land—but not on your home—you would have to increase your coverage under “coverage B” (other structure) to reflect the cost of the panels to ensure they are covered.

In the second scenario, you contract with the solar company to lease the solar panels, and therefore you do not own them. Since the solar company owns the panels, it is its obligation to insure them, and you do not have to increase your insurance to accommodate the value of the panels.

It’s important to contact our office whenever you plan to add to or improve your property. Many insurance companies are leery of solar panels because of their vulnerability to damage by storms and the potential for electrocution when firemen get them wet putting out a fire. You will want to know the insurance implications of adding solar panels before the work contract is signed. We are here to help make sure you are covered adequately.