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Renewable Energy, Efficiency, and Insurance

Solar PV on the roof of a house near Boston, MA. Photo by Gray Watson, Wikimedia.

Solar PV on the roof of a house near Boston, MA. Photo by Gray Watson, Wikimedia.

By George Harvey

A renewable energy project can cost a lot of money, and it is important that it be properly insured. The same is true of an efficiency project. Doing either can increase the value of a home or business, and it is best to consult the insurance company on coverage.

An insurance company has to be able to know exactly what it is insuring. This means that the company has to be informed of any a substantial change to a property. It will sometimes require a policy change to cover the change explicitly. Sometimes, it will require a new appraisal. At the opposite end of the spectrum is a small addition that is simply covered, provided it is documented. All of this is, of course, subject to the actual terms of the policy.

One example of an installation that only needs to be documented is a small efficiency addition, such as a window-mounted heat pump. Such an appliance might cost less than $2000, and could be covered by a homeowner’s policy. The question of whether it is covered or not will depend on the policy, and it is always best to check with the insurance agent instead of guessing.

A more substantial addition might come in the form of a solar installation on the roof or a ground-mounted solar system. In either of these cases, the value of the property may or may not change, depending on a variety of circumstances. For example, a leased system might not need to be covered, as it is not part of the property until actually purchased. By contrast a purchased system would probably change the value of the property, and this would imply that the policy should be at least updated.

An efficiency project might also change the value of a house, and in some cases could increase it greatly. A badly insulated house that has old, inefficient windows and an obsolete heating system would have a market value well below one that is up to date. The money spent on a deep energy retrofit for such a building could turn it into a very efficient and comfortable home, and that investment should certainly be protected. Again, the policy will have to be updated or the insurance will only cover the house as it used to be, before the change.

Some systems are special cases. If a group of neighbors decide to put up a common solar array in someone’s back yard, it should definitely be insured. While professional developers of community systems generally have a pretty good idea of how to deal with such systems, it could be forgotten in a small system.

This brings us to a question of how to get insurance. In all cases, coverage is most likely to be better and premiums lower when the insurance agent is familiar with renewable energy and household efficiency, and is able to help find the best policy.

The bottom line is, when in doubt, check.

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