Solar Panels on Your Home or Condo — Are You Properly Covered? By Michael Haugen, Winona Agency Inc./WA Insurance Group
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customer recently came into our office and asked if he would have coverage if he put solar panels onto his roof. Initially I thought to myself yes, of course he would have coverage as long as the unit was permanently attached to his home. But this got me thinking. What if the solar panel was a stand-alone unit in his yard? Would he have coverage? What if the solar panel installation costs $20,000 — would coverage B “other structures” provide an adequate limit in the event of a loss? I would assume there are several different types of solar panels that can be a separate structure and/or attached to the home or condo — would they all be covered the same by the insurance company? Then I began to analyze the HO6 owner’s policy and how this would differ from a traditional HO5 homeowner’s policy. My suggestion to the customer was to get a quote for the installation from the contractor. Before starting any work, we could have a conversation with the insurance company about how best to cover the item and program the coverage accordingly. This would also notify the insurance company of the material change, so if he had a claim we would have no surprises. The HO5 (homeowners) question was relatively straightforward, but it got me thinking about how the HO6 (common interest community) policy would differ. The governing documents for most community associations state the association is responsible for insuring the buildings and all common areas. In the event a unit owner were to install a solar panel on the exterior of his unit, who provides coverage? 13
Minnesota Communit y Living
The agent should have a conversation with the insurance company to confirm. Because the solar panel is permanently attached to the exterior of the unit, the association’s policy should provide coverage. To be sure of this, the unit owner should make the association aware of the addition of a solar panel, which is usually required before an owner makes any material alteration to the exterior of his unit, anyway. But, if the board of directors approves this change, it should also make sure the association has enough insurance coverage to cover the replacement in the event of a loss. Two other considerations may come into play here. First, the association typically has a much larger deductible than the unit owner and this could leave significant outof-pocket expense if a claim were to occur. Second, in the event of a loss, the insurance company would compensate the named insured (in this case the association and not the unit owner), even if he paid the up-front expense to have the solar panels installed. Also, since community associations usually have the right to assess the cost of any deductible back to the owner of the affected unit, the owner will want to have adequate loss assessment coverage in place. This is why the owner should make sure to have a conversation with his own agent and/or to make sure the association’s agent is consulted about how best to cover the panels. In closing, I would recommend that the association and the owner who wants to install solar panels have an in-depth conversation with their agents before moving forward, so everyone is on the same page. Make sure you know the value of the panels (which can be as much as $30,000 installed) and discuss how a claim would likely be handled in the event of a loss so, if a loss occurred, there would be no surprises.
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