HOMES WITH LEASED SOLAR PANELS vs SOLAR PANELS OWNED BY THE HOMEOWNER

ONCE AGAIN, THERE ARE RUMORS & CONCERNS BY SEVERAL REALTORS/LENDERS SURFACING REGARDING HOMES THAT HAVE SOLAR PANELS.

INSURANCE = WE HAVE ABSOLUTELY NO PROBLEM WHATSOEVER INSURING HOMES WITH SOLAR PANELS.

THE PROBLEM TYPICALLY EXISTS WITH THE COMPANY THAT OWNS THOSE SOLAR PANELS, AND WHETHER OR NOT THE HOMEOWNER EITHER LEASES THOSE PANELS, OR IF THEY’RE ACTUALLY BUYING/OWN THE SOLAR PANELS. IF THE SOLAR PANEL CONTRACT IS A “LEASE AGREEMENT” THEN TYPICALLY, THE LEASING COMPANY WOULD BE RESPONSIBLE FOR INSURING THE PANELS, AND THERE WOULD BE NO NEED FOR THE HOMEOWNER TO CARRY ADDITIONAL LIABILITY COVERAGE. IT IS IMPERATIVE THAT THE REAL ESTATE ATTORNEY BE INVOLVED AND REVIEW ANY CONTRACT; ESPECIALLY WHEN THE HOME HAS SOLAR PANELS.

THE FOLLOWING VERBIAGE WOULD BE TYPICAL INSURANCE VERBIAGE IN A LEASING AGREEMENT FOR “LEASED SOLAR PANELS”;

Insurance for “LEASED SOLAR PANELS”

a. SunBurn Solar Power is responsible for insuring the Solar System:

(i) SunBurn carries insurance covering damage to and theft of the Solar System;

(ii) SunBurn carries commercial general liability insurance (“CGL”) and workers’ compensation insurance.

(iii) Commercial general liability, in an amount not less than one million ($1,000,000) dollars per occurrence and two million ($2,000,000) dollars annual aggregate

INSURANCE FOR HOMEOWNER “OWNED SOLAR PANELS”::

IF THE SOLAR PANEL IS OWNED BY THE HOMEOWNER, THEN THE SOLAR COMPANY CONTRACT WOULD REQUIRE THE HOMEOWNER TO INSURE THE PANELS TO A SPECIFIC DOLLAR AMOUNT, AND THAT CONTRACT TYPICALLY READS:

THE FOLLOWING WOULD BE TYPICAL VERBIAGE OF A SOLAR COMPANY CONTRACT WHEN THE HOMEOWNER OWNS/IS BUYING THE SOLAR PANELS:

HOMEOWNERS INSURANCE REQUIREMENT: HOMEOWNER MUST CARRY GENERAL LIABILITY, IN AN AMOUNT OF NOT LESS THAN ONE MILLION DOLLARS ($1,000,000) PER OCCURRENCE AND TWO MILLION DOLLARS ($2,000,000) ANNUAL AGGREGATE

SO: WHAT IS THE PROBLEM, OR WHAT IS THE BIG DIFFERENCE ???

THE BIG PROBLEM OR DIFFERENCE IS THAT “MOST” HOMEOWNERS INSURANCE POLICIES CONTRACT VERBIAGE IS AS FOLLOWS:

SECTION II – LIABILITY COVERAGES:

Coverage E – Personal Liability:

If a claim is made, or a suit is brought against an “insured” for damage because of “bodily injury” or “property damage” caused by an “occurrence” to which the following applies:

THE KEY WORD IN THE HOMEOWNERS INSURANCE POLICY IS: “PER OCCURRENCE”

A TYPICAL HOMEOWNERS INSURANCE POLICY ONLY CARRIES “$300,000” LIABILITY
THERE IS NO SPECIFIC NUMBER OF OCCURRENCES THAT CAN OCCUR, HOWEVER, THERE IS A “PER-OCCURRENCE” LIMIT
“SOME” INSURANCE COMPANIES WILL OFFER UP TO $1 MILLION LIABILITY, BUT MOST WILL ONLY GO UP TO $500,000.

SO, WHAT IS THE HOMEOWNER TO DO?

VERY SIMPLE – FIND AN INSURANCE COMPANY THAT WILL OFFER $1 MILLION LIABILITY. CALL ME – PROBLEM SOLVED..!!!!!!!!!!!!!

??? = IS THE ADDITIONAL $1 MILLION LIABILITY INSURANCE EXPENSIVE: THERE IS A MINIMAL CHARGE FOR ADDITIONAL INSURANCE, HOWEVER, MANY INSURANCE CARRIERS WILL ONLY OFFER UP TO $500,000 LIABILITY COVERAGE, SO THE HOMEOWNER MAY HAVE TO PURCHASE AN “UMBRELLA” POLICY WHICH COULD RUN UPWARDS OF $300 PER YEAR ADDITIONAL PREMIUM – SO BUDGET THE DTI ACCORDINGLY

??? = DOES THIS SOLVE THE PROBLEM WITH THE SOLAR COMPANY: NO – BECAUSE THE CONTRACT WITH THE SOLAR COMPANY USUALLY REQUIRES THAT THE HOMEOWNER CARRY $1,OOO,OOO (ONE MILLION) PERSONAL LIABILITY WITH A $2,000,000 (TWO MILLION) AGGREGATE COVERAGE

THE PROBLEM IS THAT THE INSURANCE COMPANY ABSOLUTELY WILL NOT AMEND THEIR LEGAL CONTRACT JUST TO APPEASE SOME SOLAR COMPANY REQUIREMENT FOR HE HOMEOWNER TO CARRY A “TWO MILLION” AGGREGATE INSURANCE POLICY.

??? = DOES THAT SOLVE THE PROBLEM WITH THE INSURANCE COMPANY: YES – IF THE HOMEOWNER HAS A LIABILITY INSURANCE POLICY FOR $1 MILLION DOLLARS, THEN IT IS LIMITED TO PER OCCURRENCE – HOWEVER, THE POLICY TYPICALLY NEVER STATES HOW MANY OCCURRENCES MAY OCCUR WITHIN THE POLICY PERIOD, SO THEORETICALLY, THE HOMEOWNER COULD HAVE TWO OR MORE OCCURRENCES. END RESULT = $2 MILLION+ COVERAGES.

BOTTOM LINE:

HAVE THE CONTRACT REVIEWED BY A REAL ESTATE ATTORNEY.

AN INSURANCE POLICY WITH $1,000,000 (ONE MILLION DOLLARS) LIABILITY SHOULD SUFFICE BECAUSE IT IS “PER OCCURRENCE”

AN INSURANCE AGENT CANNOT JUST SLAP TOGETHER AN EVIDENCE OF INSURANCE FORM OR DEC PAGE THAT AMENDS THE INSURANCE POLICY TO READ: $ TWO MILLION DOLLARS” AGGREGATE, BECAUSE THAT WOULD BE TAMPERING WITH A LEGAL CONTRACT AND COULD COME WITH HEAVY FINES, PENALTIES, AND PROBABILITY OF LOSS OF LICENSING.

This information is provided as informational only, does not specifically represent any actual insurance binder/policy, and is not legally binding. I am not an insurance agent, this information is shared via the permission of Jerry Pilkington of SC Insurance Brokers. Consult an insurance agent if you have any questions about solar panels.