Florida may be known as the Sunshine State, but insurance agents say they were unprepared for the recent boom in rooftop solar installations across the state, installations that can affect coverage, premiums and even home sales.
“To tell you the truth, we kind of got caught off guard,” said Christy Wolfe, sales development manager at Florida Peninsula Insurance and Edison Insurance.
The number of solar panels and solar power installation companies has exploded in Florida in recent years. Florida‘s solar companies are now over 700 by some estimates, and solar capacity has jumped 57% in 2020 alone, the US Energy Information Administration reported. Experts say the boom appears to be the result of falling technology prices, lower interest rates on financing, federal tax refunds and a change in public policy.
State regulators in 2018 changed a key rule and now allow rental of solar equipment. This drastically reduced the initial costs for homeowners. According to the Florida Public Service Commission, more than 71,500 Florida properties had solar installation in the first quarter of this year. Other estimates put the figure up to 90,000. This is almost eight times more than in 2017.
But homeowners and some insurance agents may be unaware of the additional insurance requirements and costs involved, or where to find coverage, agents said at a rally of estate agents in Pensacola. last week.
“There isn’t a lot of history on solar panels. There’s not a lot of data, so a lot of operators won’t be covering homes with solar power, ”Wolfe said. “And when you start to punch holes in a roof, it’s problematic.”
Only a limited number of carriers in the struggling Florida market, already facing soaring roof replacement costs, hurricane losses and what they say is excessive claims litigation, will cover homes. with solar power, agents said. Some have no exclusions and will cover panels under Coverage A section of home insurance policies. Others exclude photovoltaic panels from damage caused by wind or hail. Others avoid it altogether, said BG Murphy, director of government affairs for the Florida Association of Insurance Agents.
Citizens Property Insurance Corp., the state-backed insurer of last resort and the state’s largest carrier, will purchase solar power in some homes, a spokesperson said. And Universal Property & Casualty, Florida’s largest private property insurer, will provide coverage in most cases. Older roofs should be in good condition, said John Lykins, marketing director for Universal in Alabama and Florida.
But the company is also discussing potential changes in coverage restrictions.
“The tricky part is the liability that goes with it,” including who may be responsible if electricity distribution systems are damaged or if a utility worker is injured due to the energy generated by residential solar panels , Lykins said.
For this reason, Frontline Insurance will not write any policies for homes that use what is known as “net metering” or the resale of excess electricity to the grid. That includes almost all solar-powered homes, except those that use small solar systems just to heat swimming pools or produce hot water, said Scott Kremkau, Frontline sales representative in the Florida Panhandle.
Florida, unlike some states, requires solar systems above a certain generating capacity to purchase a $ 1 million liability policy to protect the grid, electricians, and linemen. Florida Public Service Commission rules state that the cutoff is 10 kilowatts of generated power. This is about the size of many residential systems.
And many carriers won’t cover as much liability with a home or umbrella policy.
“This is something that we absolutely will not cover,” Kremkau said.
To complicate matters, some utilities require that they be named in the policy. Others don’t.
A number of insurers have taken the position that a house that sells electricity to the utility is in fact a business, excluded from standard home insurance. But the issue has sparked much debate statewide. Murphy of FAIA said some agents wondered: Wouldn’t an insured who spends money on hurricane shutters and hurricane clips – in return for a premium discount – also be considered like a ‘business? “
The FAIA has asked the State Civil Service Commission for clarification on the matter. It will likely take litigation and appellate court rulings to ultimately resolve what exactly is covered or should be covered, Murphy said.
“I don’t understand that some carriers see this as a business. I don’t agree with that, ”said Amber Bradford, agent / owner of We Insure in Navarre, Florida.
Bradford has become something of an authority on solar panel coverage, in part because she had a system installed in her own home. She explained that in order for some clients to be covered for liability, she had to maximize their owner’s policy and then write an excess liability policy.
All of this adds significant costs to the energy-conscious homeowner. A residential solar system can cost $ 30,000 to $ 50,000, much more than the cost of a roof, and the insurance policy should cover all of that. So an annual premium of $ 3,000 on a $ 250,000 home, for example, could increase to $ 500. Add liability coverage and it costs another $ 350 to $ 1,400 per year, depending on the carrier, Bradford said.
“Homeowners don’t realize all of this,” said Mary Jordan, owner of Gulf Coast Insurance, an agency.
And solar companies, perhaps fearing that higher premiums could wipe out potential savings and scare homeowners, often don’t explain the insurance side of the equation, owners and agents said.
“There is a bit of deception when they sell these systems,” Kremkau said. “They don’t tell the whole story.
Some of the concerns of insurers, however, may be overstated, a solar energy expert said.
“There is a lot of data showing that solar panels help hold a roof in place. They are beneficial, not detrimental, ”said Philip Fairey, director of the Florida Solar Energy Center, a research organization based at the University of Central Florida. The center was established by the Florida legislature in 1975 to study all aspects of solar energy.
Installers often warrant their solar panels for 25 years and bolt or screw equipment into roof rafters, using sealants to prevent leaks, Fairey explained. Systems across the state have survived several hurricanes with minimal damage. A solar power company gave examples of roof shingles that were damaged in a hurricane, except for the location of the solar panels.
But even if the equipment is securely attached, replacing a roof means removing the PV panels and supporting structures, then reinstalling when the roof is complete. Some solar companies will agree to cover the costs, others will not, insurers said. This is a particularly delicate point in Florida. State law requires that if only 25% of the shingles are damaged in a storm, the entire roof must be replaced. It is a law that insurers hope to change. The costs of full roof replacement have dramatically increased claims costs and premiums, insurance companies said.
On the issue of liability and inadvertently returning power to the grid, that fear is also misplaced, Fairey said.
“It’s a very old concern. The inverter problem was solved 20 years ago, ”he said. “There is virtually no chance that this will happen.”
Apparent reluctance by insurers to solar power has caused problems in the housing market, agents said. Many solar installations are financed by 10 or 20 year loans. But a potential buyer may not want to shoulder the bill – as well as the higher insurance premiums, Jordan said.
“Some buyers are all about solar power, but only if it pays off,” said Lavada McIntyre, a real estate agent in Pensacola.
Another problem: Many real estate appraisers won’t view solar panels as added value to the property, but the insurer must consider the full replacement cost, agents said.
Bradford, the owner / agent and solar customer, had this advice for homeowners considering a rooftop PV system: With many insurers in Florida now requiring a new roof every 10 years anyway, go ahead and install a new roof before installing the solar panels.
“If it’s not your home forever and you don’t plan on keeping it, solar power may not pay off,” she said.
She also noted that some insurance agents are not as knowledgeable as they should be about the increasing use of solar energy. The confusion has led to a lack of insurance in some cases and unnecessary liability coverage in others.
“It’s a bit of a mess right now,” she said.