Home Insurer Revises Policy on Residential Solar Panels

[JSchnee21]

So how does a Lease work when your installer goes belly up? Do you still owe the terms of the contract to the leasing agency? Or was the contract with the now defunct installer and the system is yours? I'm just curious how all of this is going to work when the Sunrun's and NRG's of the world go into restructuring. Presumably they've commoditized and sold off all of the their contracts already (like mortgages) so you're still liable to the leasing/finance company.

[Ian S]

That is a great deal on that system... do you mind telling who the contractor was and what year u got into that deal? i got a prepaid lease from Solartopps and paid 11k for 5.8k system and $1,100 at the end of 7 year

Well, the contractor, Perfect Power went belly up a few months after my system was installed in May 2012 although the prepaid lease was actually signed in October, 2011. At that time, the power company, APS was providing a $1 per watt rebate for solar, all of which went to the lessor. Yes, it was a great deal!

[jay galan]

I'm also with State Farm but only cover 2/3 of my electric usage so the issue doesn't apply to me. It does sound stupid and not thought through. I had a recent review of my insurance coverage and the agent never mentioned it although I did mention the change in status of my solar (bought-out lease.). He did recommend that I up my building coverage to deal with the solar and today's cost of rebuild (not revamped in at least a decade). I am considering getting quotes from other companies but may wait until we move next year.

That is a great deal on that system... do you mind telling who the contractor was and what year u got into that deal? i got a prepaid lease from Solartopps and paid 11k for 5.8k system and $1,100 at the end of 7 year

[azdave]

Update:

Making the change to a new insurance company. They have no restrictions on my solar and just added the value of the system to the dwelling coverage. Since we paid off our house recently, I took the opportunity to increase our liability coverage and still came out $750 less annually for the house and cars combined.

[JSchnee21]

Yeah, fat chance. Getting an agent to put anything in writing, on company letterhead, beyond the corporate policy documents that come from legal and underwriting is an exercise in futility. If you want a legal opinion on the writing, I would talk to a lawyer. But if you can get the same or better coverage elsewhere for the same or less money, then why bother, I'd drop them in a heartbeat if there was any doubt. There are lots of fish in the sea.

The way I read that statement, it seems very plausible that their attorneys could argue that any system which produced 125% or more in any one month in the last 12 months could invalidate coverage. Taking the average is wishful thinking. Let along what the agent is suggesting.

[Matrix]

I thought you sat with him and ask for options earlier, and he seemed disinterested ? Now all the sudden he wants to keep u around? I'd start walkin.

[jflorey2]

Now that I've told my agent I'm going elsewhere, he says that I am reading the policy info wrong. He says that as long as I have a single month in the last 12 months that does not exceed 125% of my usage I would still be covered, even if I was over 125% in all the other months.

Great news! Get him to put that in writing and you are covered.

[azdave]

Now that I've told my agent I'm going elsewhere, he says that I am reading the policy info wrong. He says that as long as I have a single month in the last 12 months that does not exceed 125% of my usage I would still be covered, even if I was over 125% in all the other months. That sure isn't that way I read their policy excerpt below. What do you think it says? I'm just curious what the layman sees in that sentence.

Property Not Covered:
Language has been revised to provide that systems and equipment used to generate electrical power exceeding 125% of the actual power usage by the residence premises in the 12-month period prior to the date of loss are not covered property.

Seems clear to me that they are referring to a 12-month average being over 125%, not every single month having to be over 125% to be excluded. I have a few months like July and August where I generate only 70% of my needs and then there are months like last April where I generated 247% of my needs (take a vacation and you bank a lot of energy). He says I am covered because I only need one month below 125% to qualify . I say he doesn't know how to read the sentence.

[Ian S]

I'm also with State Farm but only cover 2/3 of my electric usage so the issue doesn't apply to me. It does sound stupid and not thought through. I had a recent review of my insurance coverage and the agent never mentioned it although I did mention the change in status of my solar (bought-out lease.). He did recommend that I up my building coverage to deal with the solar and today's cost of rebuild (not revamped in at least a decade). I am considering getting quotes from other companies but may wait until we move next year.

[SunEagle]

I have a feeling there was less thought put into it than that. Like the previous poster said, someone went to a seminar and heard "many utilities won't approve more than 125% of your load being replaced by solar" and the rep heard "if it's over 125% it's not approved so it's probably unsafe."

And I am always being told people are not gullible or easily persuaded into thinking what is "fear" driven truth instead of the real truth.

Anyone want to buy a bridge?

[jflorey2]

Maybe. IMO I would think if I was the insurance company I would just raise my rates based on some idea that more solar generation equipment meant a higher probability of a failure resulting in an insurance claim. But to say we won't cover you if you have X% generation but it is ok if you have Y%. Seems stupid to me.

I have a feeling there was less thought put into it than that. Like the previous poster said, someone went to a seminar and heard "many utilities won't approve more than 125% of your load being replaced by solar" and the rep heard "if it's over 125% it's not approved so it's probably unsafe."

[TAZ427]

There's definitely some spreading, but I'd not put it all on the backs of Coastal areas. There are over $10B in insurance losses from Tornado's and Thunderstorms a year. $15B in Flood and Tropical Storms (non-Hurricane related) and Hurricanes can be $0-$25B in a year, but it's more random while the others are pretty steady state. That said, I don't see how a 'Coastal Area' that's 50-100 miles inland that is paying 3x the national average for insurance is spreading the Hurricane damage costs to the rest of the nation, when these homes are largely uneffected by Cat 3 and Cat 4 Hurricanes whose Eye of the Hurricane went right over their area. The first mile or two is totally ravaged, the next 10 or so major damage, and then the damage starts to fall off exponentially. The major spreading of that insurance cost for coastal areas is spread over the first 100mi or so inland, while it's primarily paying for the damages of that first 10miles. Keep in mind that 39% of the US population lives in a county that are coastal.

[DanS26]

Interesting theory, customers in 'disaster prone areas' get slammed in terms of homeowners insurance rates, and many things like flood damage, even if it's do to a natural disaster excluded on top of it, without paying for it separately. My Insurance rates tripled in Houston, TX area after Hurricane Rita in 2005. The funny thing is that we had 0 damage and most people living in the Houston Area had zero damage, it was those living right on the coast (Galveston) that took the server damage. That was a Cat 3 at landfall. In 2008 Ike came along and hit as a Cat 4, right on top of Houston, same situation, Galveston devastated, Houston area mostly only some moderate damage, a number of down trees, loss of electricity, ... But it's not the 'right on the coast' that's paying for it, it's spread out deeper into the state, but I wouldn't say across the country. Now living in California, I pay 1/3 of what I was paying in Houston for my home owners insurance, and my House is 2x the cost. That to me doesn't say it's being spread around the rest of the country, just a bit further inland than what they really should...

I think if you delve into the reinsurance industry you will find that the cost of insuring high risk areas such as coastal hurricane prone areas, those risks are spread out over the entire country. It is not an even spread but it is borne by everyone. The formulas can get quite complicated as insurance companies try to limit risk by buying stop loss insurance on the wholesale market. Those reinsurance costs are built into every policy sold to the consumers everywhere.

[azdave]

Wow, I hope you live in a palatial estate for that kind of home owners premium.

Our 1600 sq ft home on under a 1/2 acre is perfect for us but I wouldn't call it palatial.

State Farm is losing my entire business with them, not just my house. I was paying $650 annually for homeowners.

[TAZ427]

Insurance companies (property damage) are caught between a rock and a hard place as their customers in disaster prone areas (coastal hurricane areas) try to lobby to have the rest of the country pay for their coastal lifestyle. Really not fair but that is the nature of the insurance industry.

Interesting theory, customers in 'disaster prone areas' get slammed in terms of homeowners insurance rates, and many things like flood damage, even if it's do to a natural disaster excluded on top of it, without paying for it separately. My Insurance rates tripled in Houston, TX area after Hurricane Rita in 2005. The funny thing is that we had 0 damage and most people living in the Houston Area had zero damage, it was those living right on the coast (Galveston) that took the server damage. That was a Cat 3 at landfall. In 2008 Ike came along and hit as a Cat 4, right on top of Houston, same situation, Galveston devastated, Houston area mostly only some moderate damage, a number of down trees, loss of electricity, ... But it's not the 'right on the coast' that's paying for it, it's spread out deeper into the state, but I wouldn't say across the country. Now living in California, I pay 1/3 of what I was paying in Houston for my home owners insurance, and my House is 2x the cost. That to me doesn't say it's being spread around the rest of the country, just a bit further inland than what they really should...