Home Insurer Revises Policy on Residential Solar Panels

[SunEagle]

I don't think they are that smart. The insurance company is always looking for ways to limit their exposure. I'll bet an underwriter attended an insurance seminar and came back to work with this brilliant plan to quietly exclude coverage to some of their customers.




125%? My guess is that they think that is a good way to weed out who is putting solar on their house for business purposes compared to private use. Yes, I think they are dumb enough to believe that people put solar on their house as a way to retire early with a fat bank account. It will certainly save me some money once I reach the ROI point but I'm not running a business making $60 a year when I am forced to sell any excess energy for below wholesale rates.

They really appear clueless in general about residential solar. I told my agent that I used to be under the 125% level but energy demands change with household changes but the sun still shines 300 days a year in Phoenix. I told him they should at least base the system size in relationshipto the square footage of the house for a more realistic approach. I know he wasn't really listening at that point because he is powerless to change it.

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.

[azdave]

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.

Agreed. When I got the premium due notice I saw that the rates were going up while the coverage was dropping in almost 20 categories. They also don't pay now if your house is damaged by fracking and resource extraction or mining that you can't control. I asked about a rider or other means to insure through them and he literally told me I would have to find another insurance company for that. Needless to say I am taking all my business elsewhere. If they'd rather not insure solar panels, I can help them with that.

[JSchnee21]

"State Farm is losing $4300 a year and a very loyal 42-year customer. Buh-bye!"

Wow, I hope you live in a palatial estate for that kind of home owners premium. Here in NJ, with Progressive/ASI I'm paying $0.54 per square foot (per year) -- and I'm over insured at that. My previous insurer (Zurich) was very similar at ~55-60 cents per square foot. I've lived here 12 years now.

Average in NJ (#41 -- 50th is cheapest)

https://www.gobankingrates.com/saving-money/home/average-cost-home-insurance-state/#12

Average in AZ (#40)

https://www.gobankingrates.com/saving-money/home/average-cost-home-insurance-state/#13

I had a colleague in PA with Stare Farm homeowners -- was paying more than double for a similarly sized home compared to mine.

Good luck,
Jonathan

[DanS26]

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.

[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...

[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.

[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.

[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.

[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."

[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?

[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.

[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.

[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.

[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.

[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.