Yes, solar panels will increase your home insurance, but usually only by $30 to $50 per year. However, if you live in Florida or have a large system, there is a hidden $1 Million liability requirement you need to know about.
I get it—you’re excited about going solar. You’ve run the numbers, you know you’ll save thousands on electricity, and you’re ready to make the switch. Then someone mentions insurance, and suddenly you’re worried your carrier will drop you or triple your premium.
Let me put your mind at ease: for most homeowners, adding solar panels is no more dramatic than installing a new roof. But there are a few curveballs—especially if you’re in certain states or installing a larger system—that your solar salesperson probably didn’t mention.
Let’s break down exactly what happens to your home insurance when you go solar, what it really costs, and how to avoid the traps that catch homeowners off guard.
How Solar Panels Affect Your Home Insurance Policy
When you install solar panels, you’re adding valuable equipment to your property. A typical residential solar system costs between $15,000 and $30,000, and your insurance company needs to account for that.
Here’s what changes:
You’ll need to increase your dwelling coverage. This is the part of your policy that covers the structure of your home. Since solar panels are permanently attached to your roof, they’re considered part of your dwelling. If a fire, hail storm, or hurricane damages your panels, your dwelling coverage pays to replace them.
Most insurance companies will require you to raise your dwelling coverage limit by the replacement cost of your solar system. If your panels cost $25,000 to install, you’ll typically need to add $25,000 to your dwelling coverage.
The good news? This increase is surprisingly affordable. Because you’re just expanding existing coverage (not buying a new policy or adding a high-risk feature), the cost is modest.
And don’t forget, insurance costs are small compared to the 30% Tax Credit savings you get upfront.https://autoloanmath.com/the-federal-clean-energy-tax-credit-estimator/
The Real Numbers: What You’ll Actually Pay
Let me show you the difference between a standard policy and one that covers solar:
| Coverage Type | Standard Policy | Solar Policy | Difference |
|---|---|---|---|
| Dwelling Coverage | $250,000 | $275,000 | +$25,000 |
| Annual Premium | $1,200 | $1,230 – $1,250 | +$30 – $50 |
| Monthly Cost | $100 | $102.50 – $104.17 | +$2.50 – $4.17 |
| Liability Coverage | $300,000 | $300,000 | No change |
| Special Requirement | None | May need equipment endorsement | Varies by insurer |
For the vast majority of homeowners, we’re talking about $30 to $50 per year—roughly the cost of one month of your old electric bill. Over the 25-year lifespan of your solar panels, that’s $750 to $1,250 in additional insurance costs while you’re saving tens of thousands on electricity.
Not a bad trade-off.
The “Tier 2” Trap: Florida’s $1 Million Liability Rule
Now here’s where things get tricky, and this is the part that catches people completely off guard.
If you live in Florida and install a solar system larger than 10kW (approximately 11.7kW DC), state law requires you to carry a $1 Million liability policy.
Let me repeat that: one million dollars in liability coverage.
Most standard homeowners policies include $300,000 in liability coverage. Some go up to $500,000. But one million? That’s a massive jump, and your regular policy won’t cover it.
Why Does Florida Have This Rule?
The state classifies larger solar installations as “Tier 2” systems, which are considered commercial-grade equipment. The logic is that these systems have more panels, more electrical connections, and theoretically a higher risk of something going wrong (like a fire or electrical issue that damages a neighbor’s property).
Whether you agree with this logic or not, it’s the law.
What This Means for Your Wallet
To meet the $1 Million requirement, you’ll need to purchase an umbrella insurance policy. This is a separate policy that sits “on top” of your homeowners insurance and provides additional liability coverage.
Cost: approximately $150 to $300 per year.
That’s on top of your regular homeowners insurance increase. So for Florida homeowners with larger systems, you’re looking at:
- $30-$50 for the dwelling coverage increase
- $150-$300 for the umbrella policy
- Total: $180-$350 per year
Still manageable, but definitely more than the “just a few dollars” your solar company might have mentioned.
How to Know If You Need the Umbrella Policy
Check your system size before you sign the contract. If your solar proposal shows a system larger than 10kW (or 11.7kW DC), you’re in Tier 2 territory. Ask your installer directly: “Will this system trigger Florida’s Tier 2 insurance requirement?”
If yes, call your insurance agent immediately to price out an umbrella policy. Don’t wait until after installation—some insurance companies can take weeks to process these policies, and you don’t want to be in violation of state law while you wait.
The “Bad Guys”: Insurers Who Don’t Like Solar
Here’s something else your solar salesperson won’t tell you: some major insurance companies have gotten skittish about solar panels, especially in high-risk areas for hurricanes, wildfires, and hail.
Homeowners have reported problems with:
- State Farm (non-renewals in Florida and California)
- Allstate (stricter underwriting in coastal zones)
- Certain regional carriers (especially in wildfire-prone areas)
These companies aren’t necessarily refusing all solar customers, but they’re being more selective. If you live in a high-risk zone and add solar panels, you might get a non-renewal notice when your policy comes up for renewal.
This doesn’t mean you’ll be uninsured. It just means you’ll need to shop around for a new carrier, and your rate might go up—not because of the solar panels specifically, but because you’re now in a different risk pool.
The “Good Guys”: Solar-Friendly Insurance Companies
The good news? Several insurers have positioned themselves as solar-friendly and actively welcome homes with solar installations:
Progressive: Known for straightforward solar coverage with minimal hassle. They’ll typically just ask for photos of the installation and your system specs.
Lemonade: A newer, tech-forward insurer that’s very open to solar. They offer quick quotes and transparent pricing.
Hippo: Another modern carrier that treats solar as a standard home upgrade rather than a red flag.
If your current insurer gives you pushback, start with these three companies. You might even find a better rate than you’re paying now.
Your Action Plan: What to Do Before You Sign the Solar Contract
Don’t wait until your panels are on your roof to deal with insurance. Here’s exactly what to do:
1. Call your insurance agent (or company) right now. Tell them: “I’m considering a solar installation of [X] kilowatts. Will you cover this under my current policy? What will it cost?”
2. Ask these specific questions:
- Will you require an equipment endorsement?
- How much will my dwelling coverage need to increase?
- What will my new annual premium be?
- Are there any system size limits or special requirements?
- (If in Florida) Will I need an umbrella policy for Tier 2 compliance?
3. Get it in writing. Don’t rely on a verbal “yeah, we cover solar.” Ask your agent to send you a written quote showing the coverage changes and new premium.
4. Shop around if needed. If your current insurer won’t cover solar or the price seems unreasonable, get quotes from Progressive, Lemonade, and Hippo before you commit to the solar contract.
5. Update your policy before installation day. Most solar contracts require proof of insurance before the crew shows up. Have your updated policy in hand so there are no delays.
The Bottom Line: Don’t Let Insurance Fear Stop You
Here’s the truth: for 90% of homeowners, adding solar panels to your insurance is a minor administrative task with a modest cost increase. You’re talking about $30 to $50 per year—a tiny fraction of your electricity savings.
Even if you’re in Florida and hit with the Tier 2 requirement, an extra $180 to $350 per year is still manageable when you’re saving thousands annually on power bills.
The key is to handle this proactively. Call your insurance agent before you sign the solar contract, not after the panels are installed. Get quotes in writing. Know exactly what you’re paying for.
Solar panels are one of the best investments you can make in your home. Don’t let vague worries about insurance costs scare you off. Do your homework, ask the right questions, and you’ll find that the insurance piece is far simpler than you feared.
Your future self—paying $30 electric bills instead of $200—will thank you.
