Florida may be known as the Sunshine State, but insurance agents say they’ve been unprepared for the recent boom in rooftop solar power installations across the state, installations that can affect coverage, premiums and even home sales.
“We kind of got blindsided, to tell you the truth,” said Christy Wolfe, sales development manager with Florida Peninsula Insurance and Edison Insurance.
The number of solar panels and solar power installation companies have exploded in Florida in the last few years. Solar companies in Florida now top 700, by some estimates, and solar capacity jumped by 57% in 2020 alone, the U.S. Energy Information Administration reported. Experts say the boom appears to be the result of lower technology prices, rock-bottom interest rates on financing, federal tax rebates, and a change in public policy.
State regulators in 2018 changed a key rule, and now allow leasing of the solar equipment. That has significantly reduced upfront costs for homeowners. More than 71,500 Florida properties had some type of solar installation by the first quarter of this year, according to Florida Public Service Commission. Other estimates put the figure as high as 90,000. That’s almost an eight-fold increase since 2017.
But homeowners and some insurance agents may not be aware of the extra insurance requirements and costs involved, or where to find coverage, agents said at a gathering of real estate agents in Pensacola last week.
“There’s not a lot of history on solar panels. There’s not a lot of data, so a lot of carriers won’t cover homes with solar,” Wolfe said. “And when you start drilling holes in a roof, it’s problematic.”
Only a limited number of carriers in the troubled Florida market, already facing soaring roof replacement costs, hurricane losses and what they say is excessive litigation over claims, will cover homes with solar, agents said. Some have no exclusions and will cover panels under the Coverage A section of homeowners’ policies. Others exclude the photovoltaic panels from damage caused by wind or hail. Others avoid it altogether, said B.G. 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 largest carrier in the state, will write some homes with solar, a spokesman said. And Universal Property & Casualty, the largest private property insurer in Florida, will provide coverage in most cases. Older roofs must be in good condition, said John Lykins, the Alabama and Florida marketing manager for Universal.
But the company is also discussing potential changes in coverage restrictions.
“The tricky part is the liability associated with it,” including who may be responsible if electrical utility systems are damaged or if a utility worker is injured from power generated by the residential solar panels, Lykins said.
Scott Kremkau (via Twitter)
For that reason, Frontline Insurance won’t write any policies for homes that utilize what’s known as “net metering,” or selling excess power back to the grid. That includes almost all solar-powered homes, except those that use small solar systems only for heating swimming pools or for making hot water, said Scott Kremkau, sales representative for Frontline in the Florida Panhandle.
Florida, unlike some states, requires solar systems above a certain generating capacity to carry a $1 million liability policy to protect the grid, electricians and line workers. The Florida Public Service Commission rules note the cutoff is 10 kilowatts of generated power. That is about the size of many residential systems.
And many 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 in the policy. Others don’t.
A number of insurers have taken the position that a home that sells power back to the utility is actually a business, excluded from standard homeowners’ insurance. But the question 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 discount on premiums – also be considered a “business?”
The FAIA has asked the state Public Service Commission for clarity on the matter. It will probably take litigation and appeals court decisions to ultimately resolve what exactly is covered or should 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 become known as something of an authority on solar panel coverage, partly because she had a system installed on her own home. She explained that for some customers to be covered for the liability, she’s had 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, much more than the cost of a roof, and the insurance policy would need to cover all of that. So, a $3,000 annual premium on a $250,000 home, for example, could increase by as much as $500. Add liability coverage and it’s another $350 to $1,400 a year, depending on the carrier, Bradford said.
“Homeowners don’t realize all that,” said Mary Jordan, owner of Gulf Coast Insurance, an agency.
And solar companies, 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 a little bit of deception going on when they sell these systems,” Kremkau said. “They’re not telling the whole story.”
Some of the insurers’ concerns, however, may be overblown, a solar power expert said.
“A lot of data shows that solar panels help hold a roof down. They’re 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 created by the Florida Legislature in 1975 to research all aspects 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 prevent 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, except for where the solar panels were.
But even if 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 companies will agree to cover the cost, others won’t, insurers said. That’s a particularly sticky point in Florida. State law requires that if just 25% of shingles are damaged in a storm, the entire roof should be replaced. It’s a law that insurers are hoping to change. Full replacement costs for roofs have added significantly to loss costs and premiums, insurance companies have said.
On the liability question and inadvertently sending current back to the grid, that fear also is misplaced, Fairey said.
“That’s a very old concern. The inverter issue was resolved 20 years ago,” he said. “There’s virtually no chance of that occurring.”
Insurers’ apparent hesitancy about solar power has caused problems in the housing market, agents said. Many solar installations are financed with 10-year or 20-year loans. But a prospective buyer may not want to assume the note — along with the higher insurance premiums, Jordan said.
“Some buyers are all about solar, but only if it’s paid off,” said Lavada McIntyre, a real estate agent in Pensacola.
Another issue: Many property appraisers won’t consider solar panels as added value for the property, but the insurer must contemplate the full replacement cost, agents said.
Bradford, the owner/agent and solar customer, had this advice for homeowners considering a rooftop photovoltaic system: With many insurers in Florida now requiring a new roof every 10 years anyway, go ahead and put a new roof on before having the solar panels installed.
“It if it’s not your forever house and you don’t plan on keeping it, solar may not pay,” she said.
She also noted that some insurance agents are not as well informed as they should be about the rapidly growing use of solar power. The confusion has led to lack of insurance in some cases and unneeded liability coverage in others.
“It is kind of a mess right now,” she said.