Solar panels and their impact on home insurance 

This article has been updated from a previous version.   

With the cost of living continually on the rise, many homeowners are looking to save money wherever they can. One way to do this is by reducing energy costs. 

Solar panels can help you save money while also cutting down on fossil fuel emissions. Once installed, your home is powered by natural, renewable energy. 

However, some homeowners encounter issues when installing roof-mounted solar panels. They can include improper installation, causing leaks, or discovering that a roof is too old or damaged to support the panels. 

Across Canada, some customers have faced complications with getting their solar panels covered by insurers. In some cases, insurers have dropped customers, citing solar panels as a liability risk or struggling to price premiums for them. 

Despite these hurdles, solar panels offer numerous benefits that make them worth considering. Here’s what homeowners should know before going off-grid. 

What are solar panels?   

Essentially, solar panels are a series of cells that absorb energy from the sun and convert it into electricity. (If you do want to geek out over the science, here’s a nice breakdown from the University of Calgary.)   

While solar panels can be mounted on racks close to the ground, most homeowners opt for their roof. In Canada, solar panels will capture the full potential of available sunshine when tilted at a 20- to 45-degree angle towards the south.    

Solar panels have become steadily more popular in Canada, with sales growing year-over-year. Just like with other climate-adaptive innovations like electric vehicle ownership, governments at the federal, provincial and municipal levels offer grants, loans and tax incentives to homeowners for installing them.  

For example, all Canadians can access the Canada Greener Homes Grant, which provides up to $5,000 to make your home more energy efficient.  

Related: A look at the rebates available for electric vehicles in Canada  

How can solar panels help homeowners save on energy costs?   

Utility costs for Canadians vary widely depending on factors like home size, reliance on natural gas or electricity, insulation quality, and location. However, solar energy offers a clear advantage: it reduces energy costs compared to fossil fuels and is expected to deliver even greater savings over time. 

According to a report from Clean Energy Canada, solar and wind power are already cost-competitive with natural gas and electricity — even before factoring in carbon taxes and government incentives. By 2035, the cost of solar power projects is projected to decrease by as much as 40%, thanks to advancements in energy storage and declining installation costs. 

Building and operating gas plants in provinces like Alberta and Ontario is significantly more expensive than installing solar panels or wind farms. Unlike fossil fuels, which are finite, solar and wind energy are abundant and renewable resources. 

That said, homeowners should consider key cost variables before investing in solar panels. These include the upfront installation costs, the amount of power required, and the amount of sunlight your home receives. While solar panels can generate power even on cloudy days, their efficiency is reduced in areas with limited sunlight or heavy shading. 

By weighing these factors, homeowners can determine whether solar panels are a cost-effective and sustainable solution for their energy needs. 

Will my insurance company cover my solar panels?   

Insurance coverage for solar panels varies by provider, as each company assesses risk factors differently. While some insurers remain hesitant to cover roof-mounted solar panels due to perceived risks, many include them under standard home insurance policies if they are directly attached to the house. In some cases, coverage may be offered as a separate endorsement to your existing policy. 

Ground-mounted solar panels or those attached to other structures on your property may also be covered, depending on the specifics of your policy. 

“There are a number of home insurance providers out there who can do it,” says Stefan Tirschler, senior policy analyst at Insurance Council of BC.  

To make sure your solar panels are adequately protected, it’s important to shop around and compare home insurance providers. This not only helps you find insurers who offer the necessary coverage but also helps you get the best price for your policy. 

Should I notify my insurance company that I am installing solar panels?   

While most home insurance policies can cover solar panels, they come with unique risks and considerations. As with any major home renovation, it’s important to consult your insurance provider or review your policy before installation. 

“Since solar panels are the exception right now, rather than the rule, your home insurance provider will not have assumed that you have solar panels on the roof,” explains Tirschler.  

“The amount of insurance you’re currently carrying likely won’t account for the added value of the panels if you had to rebuild your home,” he added. 

He also recommends that before even considering the installation, make sure the frame of your home can support the added weight of solar panels on the roof.   

“A professional provider will handle the necessary permitting and any required engineering studies to confirm that your roof is strong enough and in good condition,” Tirschler advises. 

Related: 5 things you don’t have to share with your home insurance company 

Will solar panels increase my premiums?    

In short, yes. Solar panels in Ontario, for example, can cost between $18,750 and $26,250, and they add value to your home.    

“Say someone is increasing their limit of building coverage by 10% because the solar panels increase that cost of rebuilding by 10%,” says Tirschler. “You would expect a roughly proportional change in the amount of premium that you're paying as well.”    

The good news is that solar panels are typically covered as part of your home’s structure. This means that if they are damaged by events like lightning strikes or falling trees, you can file a claim to cover the cost of replacement. 

If you’re upgrading or replacing your roof to accommodate the panels, this could also reduce the likelihood of future roof damage claims, potentially helping to offset premium increases over time. 

Related:  What is a heat pump and how does it work?  

Are there options other than solar panels to decrease my energy costs?   

If solar panels aren’t practical for your home due to cost, poor sunlight conditions, or structural concerns, there are still ways to reduce your energy bills. 

1. Cool roofs 

Painting your roof white or using lighter-colored shingles can reflect sunlight, helping to keep your home cooler in the summer and reducing energy use. 

2. Green roofs 

Vegetation-covered roofs provide natural insulation, lowering energy consumption while also improving air quality. Some municipalities offer rebates or tax incentives for homeowners who install green roofs, making this a cost-friendly option for those interested in sustainable alternatives. 

3. Solar panel leasing 

For those who want solar energy without the steep upfront cost, leasing panels is an option. You’ll pay a monthly fee but save on energy expenses in the long run. If you go this route, remember to notify your insurance provider, as leased panels may require policy adjustments. 

Solar panels can help homeowners save money on energy and reduce their carbon footprint. But it's important to consider the costs, including how they might affect your insurance, before deciding to install them. 

If you do end up installing solar panels, remember to notify your insurance provider about the change. Whether the panels add value to your home or are considered a possession under a lease agreement, your policy may need to be adjusted accordingly. 

Read more: Climate change is upending the home insurance industry. And it’s going to cost you