More and more Canadian households are embracing solar power, spurred by government initiatives encouraging sustainable energy solutions.
About one in 200 Canadian homes have residential solar panels, according to a 2023 report by Dunsky Energy and Climate.
But when homeowners install solar panels, many don’t realize the impact it can have on their insurance. Some may believe that their panels will be covered under their existing policy, much like replacing an old appliance or making cosmetic upgrades.
But installing solar panels isn't just a minor change, as Braeden King (pictured) pointed out: it's a structural modification that alters the risk profile of a home.
“Clients may assume it’s automatically covered or that they don’t need to disclose it,” said King, managing partner of Billyard Insurance Group’s (BIG) Stoney Creek branch. “One of the biggest misconceptions homeowners have is that they don't need to inform their insurance provider when they install solar panels.”
Unlike getting a new fridge or redoing the siding, adding solar panels involves modifying the home's electrical system. And, more often than not, they’re installed on the roof, which introduces new risks.
Solar panels are generally covered under the dwelling rebuild cost, meaning the home’s insured value increases to account for them. Some companies may include panels under detached private structures if ground-mounted, according to King. Few insurers offer specific solar panel endorsements.
Insurers consider factors like the location and installation of the panels, whether they are roof- or ground-mounted, and whether a professional installed them. The source of ownership (leased vs. owned) is another concern.
The age of the roof matters, too. For example, installing solar panels on a 25-year-old roof with brittle shingles can be an issue, King said.
But the biggest factor is whether you’re selling electricity back to the grid. “That’s a major red flag for most insurers in Ontario,” said King. “There’s a big gap between using panels for personal use—like powering a Tesla or greenhouse—and selling electricity back to the grid for profit.”
Failing to disclose this critical information could lead to complications in the event of a claim, King added, and potentially leave homeowners exposed to risks they thought were covered.
The risks associated with solar panels vary based on their placement. Roof-mounted panels are exposed to weather risks and roof damage, while ground-mounted panels are more vulnerable to theft or tampering. Homeowners should ensure their policy provides all-risk or comprehensive coverage to include these perils.
Roof-mounted solar panels are especially vulnerable during severe weather events, as they’re exposed to potential damage from both hail and wind. King also highlighted the possibility of panels being ripped off in a windstorm, which could cause significant damage if they become airborne and strike a neighbouring home or vehicle.
Because of the risks, solar panels typically increase home insurance premiums. They may also affect a homeowner’s ability to bundle home and auto insurance.
“If a provider disallows coverage due to factors like selling electricity back to the grid, the homeowner might need to move their home insurance elsewhere, which could reduce bundling discounts,” King said.
However, roof upgrades done to accommodate panels may reduce future claims and premiums.
King stressed that it’s important for brokers to have a conversation with homeowners considering solar panel installation.
“Homeowners may misunderstand their policy or rely on inaccurate information found online, but each insurance company has different rules regarding solar panel coverage,” he said. “It’s not one-size-fits-all.”
Do you see other ways solar panel installation could impact home insurance coverage? Please share your insights below.
