Florida could also be often known as the Sunshine State, but some insurance agents say they’ve been unprepared for the recent boom in rooftop solar energy installations across the state, installations that may affect coverage, premiums and even home sales.
“We sort of got blindsided, to inform you the reality,” said Christy Wolfe, sales development manager with Florida Peninsula Insurance and Edison Insurance.
The variety of solar panels and solar energy installation firms have exploded in Florida in the previous few years. Solar firms in Florida now top 700, by some estimates, and solar capability jumped by 57% in 2020 alone, the U.S. Energy Information Administration reported. Experts say the boom appears to be the results of lower technology prices, rock-bottom rates of interest on financing, federal tax rebates, and a latest interpretation of public policy.
The Florida Public Service Commission in 2018 declared that its rules fully allow leasing of the solar equipment to the homeowner, if the lease terms are usually not structured to, in effect, sell electricity to the shopper. That has significantly reduced upfront costs for homeowners. Greater than 71,500 Florida properties had some style of solar installation by the primary quarter of this 12 months, in accordance with commission. Other estimates put the figure as high as 90,000. That’s almost an eight-fold increase since 2017.
But homeowners and a few insurance agents is probably not aware of the additional insurance requirements and costs involved, or where to seek out coverage, agents said at a gathering of real estate agents in Pensacola last week.
“There’s not a variety of history on solar panels. There’s not a variety of data, so a variety of carriers won’t cover homes with solar,” Wolfe said. “And if you start drilling holes in a roof, it’s problematic.”
Only a limited variety of carriers within the troubled Florida market, already facing soaring roof substitute costs, hurricane losses and what they are saying is excessive litigation over claims, will cover homes with solar, agents said. Some don’t have any exclusions and can cover panels under the Coverage A bit of householders’ policies. Others exclude the photovoltaic panels from damage attributable to wind or hail. Others avoid it altogether, said B.G. Murphy, director of Government Affairs for the Florida Association of Insurance Agents.
Residents Property Insurance Corp. the state-backed insurer of last resort and the most important carrier within the state, will write some homes with solar, a spokesman said. And Universal Property & Casualty, the most important private property insurer in Florida, will provide coverage normally. Older roofs should be in good condition, said John Lykins, the Alabama and Florida marketing manager for Universal.
But the corporate can also be discussing potential changes in coverage restrictions.
“The tricky part is the liability related to it,” including who could also be responsible if electrical utility systems are damaged or if a utility employee is injured from power generated by the residential solar panels, Lykins said.
For that reason, Frontline Insurance won’t write any policies for homes that utilize what’s often known as “net metering,” or selling excess power back to the grid. That features just about all solar-powered homes, except those who use small solar systems just for heating swimming pools or for making hot water, said Scott Kremkau, sales representative for Frontline within the Florida Panhandle.
Florida, unlike some states, requires solar systems above a certain generating capability to hold a $1 million liability policy to guard the grid, electricians and line staff. The Florida Public Service Commission rules note the cutoff is 10 kilowatts of generated power. That’s in regards to the size of many residential systems, although output doesn’t all the time equal rated capability.
And lots of carriers won’t cover that much liability with a homeowners’ policy or umbrella policy.
“That’s something we absolutely won’t cover,” Kremkau said.
To complicate matters, some utilities require that they be named within the policy. Others don’t. Tampa Electric Co., considered one of the larger power firms within the state, recommends liability insurance for its customers with systems as much as 10 kilowatts, but requires the coverage for those with larger systems.
A variety of insurers have taken the position that a house that sells power back to the utility is definitely a business, excluded from standard homeowners’ insurance. However the query has generated much debate across the state. FAIA’s Murphy said that some agents have wondered: Wouldn’t a policyholder who spends money for hurricane shutters and hurricane clips – in exchange for a reduction on premiums – even be considered a “business?”
The FAIA has asked the state Public Service Commission for clarity on the matter. It should probably take litigation and appeals court decisions to ultimately resolve what exactly is roofed or ought to be covered, Murphy said.
“I don’t understand that some carriers consider it a business. I disagree with that,” said Amber Bradford, a We Insure agent/owner in Navarre, Florida.
Bradford has turn into often known as something of an authority on solar panel coverage, partly because she had a system installed on her own residence. She explained that for some customers to be covered for the liability, she’s needed to max out their homeowner’s policy, then write an excess liability policy.
All of which adds significant cost for the energy-conscious homeowner. A residential solar system can cost $30,000 to $50,000, far more than the price of a roof, and the insurance policy would wish to cover all of that. So, a $3,000 annual premium on a $250,000 home, for instance, could increase by as much as $500. Add liability coverage and it’s one other $350 to $1,400 a 12 months, depending on the carrier, Bradford said.
“Homeowners don’t realize all that,” said Mary Jordan, owner of Gulf Coast Insurance, an agency.
And solar firms, perhaps fearing higher premiums could negate potential savings and scare away homeowners, don’t often explain the insurance side of the equation, homeowners and agents have said.
“There’s slightly little bit of deception occurring once they sell these systems,” Kremkau said. “They’re not telling the entire story.”
A few of the insurers’ concerns, nevertheless, could also be overblown, a solar energy expert said.
“Numerous data shows that solar panels help hold a roof down. They’re useful, not detrimental,” said Philip Fairey, director of the Florida Solar Energy Center, a research organization based on the University of Central Florida. The middle was created by the Florida Legislature in 1975 to research all points of solar energy.
Installers often warranty their solar panels for 25 years and bolt or screw the equipment into the roof rafters, using sealants to stop leaks, Fairey explained. Systems across the state have survived multiple hurricanes with minimal damage. One solar company gave examples of roof shingles that were damaged in a hurricane, apart from where the solar panels were.
But even when the equipment is securely fastened, replacing a roof means removing the photovoltaic panels and support structures, then reinstalling after the roof is finished. Some solar firms will comply with cover the price, others won’t, insurers said. That’s a very sticky point in Florida. State law requires that if just 25% of shingles are damaged in a storm, the whole roof ought to be replaced. It’s a law that insurers are hoping to vary. Full substitute costs for roofs have added significantly to loss costs and premiums, insurance firms have said.
On the liability query and inadvertently sending current back to the grid, that fear is also misplaced, Fairey said.
“That’s a really old concern. The inverter issue was resolved 20 years ago,” he said. “There’s virtually no probability of that occurring.”
Insurers’ apparent hesitancy about solar energy has caused problems within the housing market, agents said. Many solar installations are financed with 10-year or 20-year loans. But a prospective buyer may not wish to assume the note — together with the upper insurance premiums, Jordan said.
“Some buyers are all about solar, but provided that it’s paid off,” said Lavada McIntyre, an actual estate agent in Pensacola.
One other issue: Many property appraisers won’t consider solar panels as added value for the property, however the insurer must contemplate the complete substitute cost, agents said.
Bradford, the owner/agent and solar customer, had this recommendation for homeowners considering a rooftop photovoltaic system: With many insurers in Florida now requiring a latest roof every 10 years anyway, go ahead and put a latest roof on before having the solar panels installed.
“It if it’s not your endlessly house and also you don’t plan on keeping it, solar may not pay,” she said.
She also noted that some insurance agents are usually not as well informed as they ought to be in regards to the rapidly growing use of solar energy. The confusion has led to lack of insurance in some cases and unneeded liability coverage in others.
“It’s sort of a large number immediately,” she said.