Do Home Warranties Cover Solar Panels?

Does a home warranty cover solar panels?

If you purchase a home warranty to help cover the cost of repairing or replacing major systems and appliances in your home, it makes sense you’d want to understand whether and how your warranty covers your home’s solar system.

Unfortunately, standard home warranties typically ignore solar arrays, according to Greg Field, owner of PGT Home Energy Solutions in Tempe, Arizona. Solar panels are considered part of the home’s structure, since they’re attached to the roof. Because of this, they’re more likely to fall under the umbrella of home insurance rather than a home warranty.

» RELATED: What does a home warranty not cover?

“(Home warranty companies) classify solar equipment as commercial-grade or exterior systems, similar to how they treat pool pumps or guest houses without a specific rider,” Field said. A rider is an optional add-on to an insurance policy or warranty.

Warranty companies operate on risk mitigation, and they know that solar inverters — the brains of the system — have high failure rates, especially in extreme climates. “They don't want that liability on a standard $50 monthly plan,” Field said.

If you do find a home warranty plan that includes solar, be sure to read the fine print, since oftentimes these plans exclude the expensive stuff. “The panels themselves rarely fail,” Field said. “It’s the inverters and the monitoring hardware that typically requires more repairs or replacements, and these usually aren’t covered.”

Most home warranties exclude leased equipment because it’s not the homeowner’s property. They also exclude damage from acts of God, such as hail or wind, which are the things most likely to destroy solar panels.

Understanding solar warranties

A solar warranty is a warranty plan that specifically covers your home’s solar system. When you install solar technology on your home, you can opt for one of these. Alternatively, some carriers offer a green technology or solar rider (a specific add-on for an additional cost) you could consider.

But Field emphasizes the importance of reading the fine print. “Often, these riders have low liability caps — maybe $1,000 or $2,000 per term, which sounds good until you consider that a single inverter replacement can easily chew through that cap, leaving you with a substantial bill anyway,” he said.

On the other hand, in the event of major repairs, a solar warranty can help assuage the cost. Basically, there are three parts to a typical solar warranty, according to Field. They are:

• Equipment warranty: This covers the physical hardware. Most standard panels get 25 years, though some premium manufacturers offer a 40-year warranty. Inverters typically get 10 to 25 years, depending on the brand.
• Workmanship warranty: This comes from the installer. It covers the roof penetrations and the conduit. These typically range from two to 10 years.
• Performance guarantee: This promises that the system will produce a certain amount of kilowatt-hours. If it underproduces, the manufacturer pays the difference.

Homeowners insurance and solar panels

Solar panels that you own outright are typically covered under your homeowners insurance policy because they are considered part of the dwelling. But if you lease your solar system, it’s more likely to be insured by the leasing company, rather than by your homeowners policy.

» MORE: Does a home warranty cover a roof?

If you reside in an area with a high risk for fires or hurricanes, your homeowners insurance policy might exclude solar panels, due to the higher likelihood that they’ll be destroyed by one of these natural disasters. If they are covered, you’ll likely pay a higher price for this coverage.

Don’t just assume that your solar panels are adequately covered. Instead, explicitly ask an agent whether your system is covered at replacement cost or actual cash value. Replacement cost is preferable because technology improves fast; if something happens, you don't want a check for the depreciated value of a 10-year-old panel.

Pros and cons of solar warranty plans

A solar warranty can provide you with some peace of mind when it comes to protecting your solar panels and system. Here, we’ll examine some potential pros and cons of a solar warranty that you might factor into your decision.