The trifecta of abundant sunshine, government incentives and the potential for lower energy bills has made solar panels an increasingly appealing choice for Australian households.
Solar power accounted for 11.2% of the country’s power supply in 2023 and was the fourth largest source of electricity generation, according to a Clean Energy Council report.1
If you’re tempted to invest in a solar system at your place, you might be wondering if your investment will be protected. So, are solar panels covered by home insurance?
In addition to addressing all your insurance coverage questions, this article looks at several factors relating to solar panel installation, such as home suitability, available government incentives, and potential costs and savings.
Is my home suited to solar panel installation?
Solar panels are usually installed on the roof because rooftops are the best spot to capture sunlight. The space available on your roof plays a key role in the design of your solar system, determining how many panels can fit. This, in turn, affects whether enough solar power can be generated to meet your energy usage needs.2
John Grimes, Chief Executive of the Smart Energy Council, says an assessment of your home by a professional installer can be a sensible first step in the process of solar panel installation.
“Solar installed by a registered and accredited tradesperson is safe, may save you money and is good for the climate,” says Grimes.
Some of the factors that might be considered in an initial assessment of your home’s suitability for solar panels include the following:2
- What is the condition of the roof? If it’s damaged or in need of replacement, it’s worth bearing in mind that you might face additional costs to remove and reinstall a pre-existing solar system should you decide to restore or replace your roof.
- What direction does your roof face? North-facing roofs catch the most sunlight and therefore produce the most electricity. If your roof gets a lot of shadow from things such as trees and other buildings, this can impact the amount of energy generated.
- What is the angle of your roof? Solar panels tend to be mounted with the angle of your roof, which can impact the amount of sunlight on the panels. If you have a flat roof, for example, solar panels may produce less electricity.
- How much weight can your roof hold? A professional installer should be able to check if your roof structure can support solar panels as they’ll add weight to your roof.
- What is the state of your electrical wiring? A professional installer can check whether the current condition of your electrical wiring will safely support solar panel installation and use.2
Continuing to care for your panels is also key to getting the best out of them, says Grimes.
“Like any electronic product, care and maintenance are key to ensuring solar panels continue working at their best. Cleaning, servicing and follow-ups on best use of product from installers are important, as are warranties from established operators.”
Are solar panels worth it?
The potential returns from embracing solar power – after the initial cost of installation – will likely depend on a number of factors, including your lifestyle and your electricity plan.
As a general rule, the payback period for solar panels – that is, the amount of time it will take for your electricity savings to match the cost of the system – is much less than the lifetime of the system.3
The upfront cost is likely to differ depending on where you live, the solar product you choose to go with, any installation challenges, and the installer’s level of after-sales service.4
“Technology is changing fast, and for the better,” says Grimes. “Many of today's panels are cheaper and more powerful than those from only a few years ago.”
There are a number of federal, state, territory and local government schemes available that can help you pay for rooftop solar. For instance, the Australian Government’s Small-scale Renewable Energy Scheme (SRES) can help with the cost of most home and business rooftop solar systems.5
To check your eligibility for rebates, use the Australian Government rebates and assistance page.6
Once the solar panel installation is complete, there are a number of ways in which you might see returns from your new solar panels. For instance, your energy bill can be reduced through the following:3
- Self-consumption: When you use solar panels to power your home, you typically need to buy less electricity from your electricity retailer.
- Solar export: If your rooftop solar system is generating more energy than you’re using, the excess solar can be exported to the grid. If your electricity plan includes a feed-in tariff, you may receive a credit on your bill.
- Reducing peak demand: Some household plans have a demand charge tariff, which means the electricity bill includes a charge based on peak demand. If your solar panels are generating electricity during this peak demand period, it can reduce the peak demand charge.3
In terms of lifestyle, you’ll get additional benefits from solar if you’re at home during the day and use it to power the aircon, or to charge an electric or a plug-in hybrid electric vehicle.
A 2024 report from the Australian Energy Market Commission suggests residential electricity prices are projected to decrease by 13% within the next decade if the shift to renewable energy progresses as expected.7
Are solar panels covered under building insurance?
As with any significant investment, it’s likely you’ll want to know that your solar panels are covered if they were to be damaged.
Some home insurance providers, including Youi, offer solar panel insurance coverage as part of their building and contents insurance.8
What does solar panel insurance cover me for?
At Youi, insured events under building and contents insurance include loss or damage incurred by events such as fire, theft, earthquake, storm and explosion.
For example, your solar panels would generally be covered if damaged by hail caused by a storm event or by a falling tree branch, which comes under the insured event of ‘impact’.8 See the Home PDS for more information, including how building fixtures are treated under insurance coverage.8
While damage to your solar panels caused by an insured event is typically a matter for your insurer, problems with the performance of your solar panels, such as any electrical issues, may be covered by the manufacturer's warranty.9
Typically, solar panels are covered by two types of warranty:9
- Performance warranties relate to the guarantee that solar panels will produce a minimum percentage of their rated energy capacity, which usually reduces as performance degrades over time.
- Product warranties typically cover physical and electrical problems that either cause your solar panels to fail or underperform. The length of these warranties can differ between brands.9
When should I tell my insurance provider I’m installing solar panels?
If your solar panels are installed but you haven’t informed your insurance company, you might be at risk of underinsurance in the event of an unexpected incident like fire, storms or theft.8
So, once your panels are installed, it’s a good idea to inform your insurer so they can adjust your coverage to reflect the replacement value of your solar power system.9
When discussing your coverage with your insurer, it may be helpful to consider the total value of your solar power system, including the inverter and other related equipment.
Will covering solar panels under insurance affect my premiums?
Your home insurance premium may increase if you choose to cover solar systems under your policy. This is because the cost of your solar power system will likely add to your home’s value, if you need to restore or rebuild your home.9
“It’s possible you could reduce your premium by selecting a higher excess, but keep in mind that this may mean a higher out-of-pocket cost in the event of a claim” says Mervyn Hartley, Youi’s Head of Product for Home and Small Business.
“It’s important to consider all the items you need cover for when selecting your sum insured and that any excess payable is within your budget in the event of a claim” adds Hartley.
If you’re considering installing solar panels and would like to know if Youi would be a good fit for you, consider starting a quote today.
1 Source: Clean Energy Council – Rooftop solar generates over 10 per cent of Australia's electricity, April 2024
2 Source: NSW Government – Home solar systems
3 Source: Aus Government, Department of Climate Change, Energy, the Environment and Water – How solar pays for itself and batteries reduce bills
4 Source: Department of Climate Change, Energy, the Environment and Water – Solar for households
5 Source: Department of Climate Change, Energy, the Environment and Water – Government rebates and loans for solar
6 Source: Department of Climate Change, Energy, the Environment and Water – Rebates and assistance
7 Source: Australian Energy Market Commission – AEMC’s outlook maps path to lower household energy costs through coordinated transition, November 2024
8 See the Home insurance PDS for full details.
9 Source: CHOICE – Are solar panels covered by home insurance?, March 2022
