Insuring Solar Panels: A Must-Read Guide for South African Homeowners and Complexes

The recent announcement by Finance Minister Enoch Godongwana regarding the National Treasury’s rebate scheme for new rooftop solar installations on private homes, effective from March 1, 2023, has spurred increased interest in renewable energy solutions among homeowners, particularly solar panel installations. However, this surge in demand has also led to confusion among body corporates and homeowners associations (HOAs) in residential estates and complexes regarding the proper insurance coverage for these installations.

  1. The National Treasury’s rebate scheme for rooftop solar installations on private homes has driven demand for renewable energy solutions in South Africa, but has also caused confusion among body corporates and homeowners associations (HOAs) about insuring these installations.
  2. Several insurance options are available for body corporates and HOAs, including increasing the building sum insured, adjusting the power-surge and exterior theft first-loss limit, or specifying the solar system as an additional item with an extra premium.
  3. Homeowners, body corporates, and HOAs must ensure that solar systems are installed by accredited professionals to avoid potential claims rejections by insurance companies and manufacturers, and to maintain adequate coverage for solar installations.

Hermanus van der Linde, the CEO of short-term insurance broker Integrisure, explained that many body corporates and HOAs are either unaware or have not been informed that they can include solar panels in their existing building insurance policies with minimal repercussions. In contrast, some associations are reluctant to insure the installations themselves, leaving individual homeowners responsible for securing coverage.

Van der Linde outlined several available options for body corporates and HOAs looking to insure rooftop solar systems or fixed generators. One option is to increase the building sum insured by the system’s replacement value, which can be added to the Participation Quota (PQ). In this case, the solar system would be fully covered for standard building risks, such as fire, hail, impact, and accidental damage.

Alternatively, associations can increase the power-surge and/or exterior theft first-loss limit to ensure comprehensive coverage for all losses up to the chosen amount on a first-loss basis. Another option is to add the solar system as a specified item with an additional premium payable, which includes full building coverage without limitations on theft and power surge. In this scenario, the solar system should be specified at its full replacement value.

Homeowners living in residential estates or complexes must obtain approval from their respective body corporates or HOAs before installing solar panels. Van der Linde emphasized the importance of discussing insurance matters at upcoming AGMs to ensure that members are well-informed about the coverage provided for solar panels, any exclusions, and potential limitations.

Although some insurers have reported hesitance from body corporates and HOAs to add solar panels to their building insurance, van der Linde encouraged owners to insist on coverage. If associations continue to resist, residents and owners in estates or complexes may need to seek coverage for their solar panels through their personal insurance policies. Various market options include adding solar panels to contents coverage or specifying them as an all-risk item.

Van der Linde also cautioned consumers, body corporates, and HOAs to ensure that solar systems are installed by a qualified, accredited installer capable of issuing a certificate of compliance. Insurance companies and manufacturers may reject claims if the system is not installed by an accredited professional. Reputable solar installers should have liability coverage, product liability, and protection against defective workmanship. When selecting a solar installer, it is essential to request proof of liability coverage.

Integrisure remains committed to monitoring market trends and developments in solar panel insurance and providing comprehensive advice on the best insurance solutions for solar panels. Van der Linde advised homeowners planning to invest in renewable energy installations to consult their brokers for the most suitable product options and ensure adequate insurance coverage for peace of mind in case of any issues.