Home Insurer Revises Policy on Residential Solar Panels

[azdave]

My homeowner's policy is due for renewal and they sent one of those flimsy little tissue paper pamphlets that most people never read. I see that there is a new exclusion mentioned in the fine print.

Excluded from any loss coverage.

"Systems and equipment used to generate electrical power exceeding 125% of the actual electrical power usage by the residence premises in the 12-month period prior to the date of loss."


So I will lose insurance coverage if I make more than 125% of what I use (never mind that the excess has little financial reward) but I would maintain coverage IF I leave all the lights on, run the pool pump extra hours or set the A/C lower during the hot summer months. Basically, if I've remembered to waste electricity in the 12 months before a loss, I will have coverage. If I have conserved energy, I could be screwed.

Hey kids! Don't turn off the lights when you leave a room and please leave the patio door open when you go out for a swim.

[jflorey2]

Excluded from any loss coverage.

"Systems and equipment used to generate electrical power exceeding 125% of the actual electrical power usage by the residence premises in the 12-month period prior to the date of loss."

It would be interesting to find out what their thought process was here. Also seems pretty easy to defeat in court if needed - "we made our best efforts to comply with the requirement, but our new refrigerator, unbeknownst to us, was more efficient." But as that exclusion only covers the system itself, such a court case probably wouldn't be worth it.

[bcroe]

I see that there is a new exclusion mentioned in the fine print.

Excluded from any loss coverage.

"Systems and equipment used to generate electrical power exceeding 125% of the actual
electrical power usage by the residence premises in the 12-month period prior to the date of loss."

So I will lose insurance coverage if I make more than 125% of what I use (never mind that the excess
has little financial reward) but I would maintain coverage IF I leave all the lights on, run the pool pump
extra hours or set the A/C lower during the hot summer months. Basically, if I've remembered to waste
electricity in the 12 months before a loss, I will have coverage. If I have conserved energy, I could be
screwed.

So what does that mean? Your solar equipment is not insured against
damage, theft or fire if you are selling electricity? Ask for an explanation.

I worry little about stuff happening to my solar. It is located far from the house, much is
underground, the rest is securely bolted down over a rather large area. About the worse
that could happen is a storm breaks half the panels, not very difficult to fix.

Anyway, who is even going to know if you generated more than you use, or how much more,
unless its on your PoCo billing statements? Its not hard to knock off a few excess percent if
that far over (I am not). I could just switch on the resistance heater instead of the heat pump,
could leave the electric heat set higher in another normally very cold building.

In a bit of the most severe cold weather, I have been known to leave every light in the house
on 24/7. I take out the LEDs and put in incandescents. Running the electric stove is effective.

Bruce Roe

[JSchnee21]

Obviously regulations vary by location and POCO, but in my locality (NJ), JCPL and PSEG won't accept an application for a residential PV system whose production is expected to exceed 100-105% of historical usage. Now as you pointed out, energy conservation efforts can reduce consumption and some systems may produce more than anticipated. Though unless you stopped using AC all together, replaced your electric baseboard heat with gas, or stopped charging your Tesla, you'd be hard pressed to be off by ~25%.

I don't understand why homeowner's policies don't have available riders for this type of thing yet. I can get a rider for everything else under the sun. Jewelry, art, musical instruments, trampolines, other structures, liability, mold, sewage backup, etc.

But I agree, it seems like a poor and somewhat arbitrary way to write an insurance policy. You would think that if the POCO accepted your application to be a residential generator that the insurance company would have to as well.

[azdave]

1. Ask for an explanation.


2. Anyway, who is even going to know if you generated more than you use, or how much more,
unless its on your PoCo billing statements?

1. Already have asked to see my agent and go upstream from there.

2. My production and usage is very clearly noted on my POCO statements so it would not take my insurance company very long to deny a claim if they had the opportunity.


My system was originally sized at slightly over a 100% match but I had more people in the house then and a stay-at-home wife. Now that it is just the two of us at home and she is out of the house 5 days a week, our energy demand is much lower. We also got a new VS pool pump last year and many other smaller upgrades that have further reduced our demands. I never thought that conserving energy would be a reason to lose insurance coverage on my system. I only have a 6.6kW grid-tie. It's not like I'm running a commercial power plant out of my home.

I don't think that a damage claim is likely but I don't like seeing my coverage drop while they announce a premium increase at the same time. Going from having coverage for a $28,000 investment to having no coverage at all is not a minor thing in my opinion. I've been with the same company since 1981 and I haven't had an insurance claim since 1983 (hail damage to our home in Indiana). There are plenty of other areas where they are reducing coverage but none that could affect me like this one does.

This change is effective in 30 days. In the last rolling 12 months we have generated 11960 kWh and used actual 8792 kWh. That puts me at 136% of needs but if I waste electricity or throw a blanket over the panels for a few days a year to get down to 125% I'm back to having coverage. What stupidity!

BTW...my POCO zeros out my account once a year and credits me at wholesale cost minus some miscellaneous admin fees so I make about $55 from that buyback. I guess that makes me a commercial enterprise.

[TAZ427]

I can see your perspective, but I also see there perspective, they don't want to cover people who are attempting to use this as a money generator, net metering to sell back to the PoCo's and in some cases getting SRECs, in a default policy. I talked to my agent before going solar, and I think it upped my insurance by $25 a year or something do to increase in fire hazard potential. No verbiage limiting the amount capacity though.

What do you have documentation of the past consumption. I'd hang on to it. Also, check with them and see exactly what there verbiage means. Ask if you're slightly over, do you get covered up to that amount that would be 125% (i.e. 125/136 -> 91.9% of it's covered...) Or is it a No, you exceeded the 125%, therefore it simply isn't covered. If it's the later, then talk to your agent about getting a waiver/exclusion based on the fact that when you originally installed it, it was only 100% of your usage, but now with lower occupancy, it's exceeding 125%. They may be more reasonable than you think, especially when you're talking about going to another insurance company because their policy is going to effectively exclude a fair amount of value to you simply because you crossed a line in the sand, when that sand is on a sand dune that's moving...

[JSchnee21]

Congrats on making 12MWh a year from a 6.6kW system -- you must live in a much sunnier place than I do (-: If you really care about the solar system coverage, I'd say it's time to find a new insurance company. Though when I recently switched to ASI (an affiliate/subsidiary of Progressive) I was very persistent with the corporate agent -- who was curious himself -- about how PV system coverage worked. He discussed it with underwriting, but other than a vague assurance that it was included as "part of the structure" he couldn't seem to get any more details. It seems homeowners companies haven't really figured out what to do with homeowner owned solar systems just yet. He assured me it was covered, but I was unable to get anything in writing that specifically called it out as a listed or covered item.

When shopping for homeowners also watch out for:

1) Coverage amounts that include property AND structures -- most people and insurers push you to insure for a value that is equal or greater than what you purchased the home for or at least a current "estimate" of market value -- property doesn't burn. If you live in a densely populated state like PA/NJ/CT/MA/CA/etc. Property (land) value can be 50% or more of market value. Talk to some custom home builders in your area. For $125-$150/sqft you can build a very nice home.

2) Annual coverage creep. With my old (and new) insurers, every year they boost my coverage by 5 or 10% even through my home value hasn't changed (or for a while 2008-2013) was dropping like a stone. Since most people are usually over insured as is (see #1) this is like instant profit for the insurers. Even if you stay with the same insurer, call them up and demand less coverage (assuming you have sufficient already)

How old is your solar system now? Have you at least broken even on the investment? Sounds like it's time for a new hobby:
1) Electric pool heater
2) Electric hot tub/jacuzzi
3) Tesla Model S or X
4) Bitcoin mining
5) Indoor Cannibis farm

There's lots of fun ways to use electricity if it's free.

[bcroe]

1. Already have asked to see my agent and go upstream from there.

2. My production and usage is very clearly noted on my POCO statements so it would not take my insurance company very long to deny a claim if they had the opportunity.


My system was originally sized at slightly over a 100% match but I had more people in the house then and a stay-at-home wife. Now that it is just the two of us at home and she is out of the house 5 days a week, our energy demand is much lower. We also got a new VS pool pump last year and many other smaller upgrades that have further reduced our demands. I never thought that conserving energy would be a reason to lose insurance coverage on my system. I only have a 6.6kW grid-tie. It's not like I'm running a commercial power plant out of my home.

This change is effective in 30 days. In the last rolling 12 months we have generated 11960 kWh and used actual 8792 kWh. That puts me at 136% of needs but if I waste electricity or throw a blanket over the panels for a few days a year to get down to 125% I'm back to having coverage. What stupidity!

BTW...my POCO zeros out my account once a year and credits me at wholesale cost minus some miscellaneous admin fees so I make about $55 from that buyback. I guess that makes me a commercial enterprise.

You must have 2 meters if they know your consumption. I am very glad there is no such thing here,
to some extent loads get switched on with the sun, so to PoCo sees as little of it as possible. The
$55 hardly seems worth it.

Given your reduction in use, it would not be very difficult to disconnect a string to balance things. Unless
you really are trying to make $. Or just do some inefficient things, electric water heater is good. It is on
my list if things get too efficient. Bruce Roe

[azdave]

I will be shopping a new insurance company if they don't have a good answer or solution. I did check with my agent before going solar and I was assured that my system would be covered no different than many other items that are included with my home coverage. To come back now and exclude it and not offer at least an optional rider is the irritating part. I went from full coverage to no coverage in one sentence. Still no answer from them yet so time to think about shopping around I guess.

Thanks for the insurance tips. I will have a discussion with them and see what options I might have. Yes, I live in Phoenix and we have a little sunshine here or there. We average 300 days a year with no significant clouds. The ROI point on my system is about 3 years away.

Yes. Two smart meters on all PV installs I've seen around here. I'll just burn electricity if I have to but that is not my plan. Not going to mess with the collection side of things either because that would mess up the advanced inverter study that I am enrolled in.

At the end of the day, it's not in the odds that I'll suffer a loss that would involve the solar panels. It just that one sentence they added to my policy that quietly mentions I'm losing a significant chunk of insurance protection due to my electric use going down.

[azdave]

It took awhile but my agent finally confirmed that I will lose homeowner's insurance coverage on my grid-tie solar as of July 18th. The will not offer any other options. If I have a claim, they will review my RE production over the past 12 months and if it is more than 125% of my actual use, I will be denied any compensation towards repairs or replacement. I'm not planning to run the pool pump 24-hours a day or leave my windows open while the A/C is on to maintain insurance coverage. They just can't seem to fathom how the numbers used to be below 125% but now are above it due to less people living at home and us becoming more energy efficient.

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

[Matrix]

. If I have a claim, they will review my RE production over the past 12 months and if it is more than 125% of my actual use, I will be denied any compensation towards repairs or replacement.

Wow ... is that only for solar and solar related claims and replacement of solar gear damaged / lost ... or is that any claim for anything reason and any item.

I have wondered the same thing for my off grid system. I could not even get a direct answer from my agent.

[BoloMKXXVIII]

Add this to the ever growing list of things to consider when thinking about adding solar to your home. Once you make the long term investment in solar your insurance company can just unilaterally change the rules and decide not to cover your investment.

[azdave]

Wow ... is that only for solar and solar related claims and replacement of solar gear damaged / lost ... or is that any claim for anything reason and any item.

I have wondered the same thing for my off grid system. I could not even get a direct answer from my agent.

According to my agent, they would not cover the liability portion either (if a panel blew off the roof and injured someone).

It's just bizarre that a change in my electric usage could mean I lose or gain full coverage. Even if I immediately started burning through electricity tomorrow, I would not get my rolling 12-month average below 125% for a few months and all the while I would not be protected.

Appointment set for tomorrow afternoon to start coverage with a new company.

[SunEagle]

According to my agent, they would not cover the liability portion either (if a panel blew off the roof and injured someone).

It's just bizarre that a change in my electric usage could mean I lose or gain full coverage. Even if I immediately started burning through electricity tomorrow, I would not get my rolling 12-month average below 125% for a few months and all the while I would not be protected.

Appointment set for tomorrow afternoon to start coverage with a new company.

I wonder if your insurance company is working with your POCO to limit the amount people can co-generate.

You would think an insurance company will cover a solar pv system or not but why put in that 125% generation set-point?

[azdave]

I wonder if your insurance company is working with your POCO to limit the amount people can co-generate.

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.

You would think an insurance company will cover a solar pv system or not but why put in that 125% generation set-point?

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.