The clean energy movement is a buzz with its latest breakthrough: The Tesla solar roof. Unlike bulky solar panels that jut out of your roofline and call attention to themselves, the Tesla solar roof is made of smooth tiles that look like a regular roof – some would say they’re even more aesthetically pleasing. They collect energy from the sun and store it until your home needs it, eliminating the need for electrical power from another source.

Consumer interest in these revolutionary roofs is off the charts, but companies that provide homeowner’s insurance are a little more dubious. The reason? A Tesla solar roof is expensive. Very expensive.

The Cost of a Tesla Solar Roof

According to the calculator on the Tesla website, putting this new technology on a 2200 square foot home that requires a 70% solar roof would set you back $46,100. (You don’t need to cover your entire roof with solar glass. It depends on the angle of your roof, how much sun exposure it has, and so on. Seventy percent coverage is the max; you may need less.) You should also spring for the $7,000 Powerwall battery to go with it.

To give an idea about how much the roof really costs, here is the cost of tesla solar roof as a proportion of median house values in the top 10 US cities.

 

Your insurance company doesn’t care how much you spend on a car. If you buy a Lamborghini, they’ll just increase your insurance premium to cover its replacement cost. This is not yet true for solar roofs. Your policy may specify that your roof will be replaced with a standard asphalt roof. Most insurance companies have a limit as to the amount they will pay to replace a roof, and it’s less than $46,100.

Lifetime Warranty

Tesla solar panels are warrantied for ‘the lifetime of your home or infinity, whichever comes first,’ according to the Tesla website. A video on the site explains that the panels are three times stronger than ordinary roofing tiles, and that a two-inch hailstone traveling at 100 mph won’t damage the solar glass. The specs indicate the panels have a Class 4 FM 4473 hail rating, a Class F ASTM D3161 wind rating, and a Class A UL 790 fire rating, all the best available in their class.

So why are insurance companies reluctant to cover them? Because your solar roof could be damaged by some other peril, such as a fire or tornado, that would not be covered by Tesla’s warranty, and then the insurance company would be on the hook.

All Roofs are Risky

The other concern that insurance companies may have is that when you install a solar roof, the roof becomes a far greater percentage of the total value of the home than a typical asphalt roof. Since roof damage is a common claim type for homeowner’s insurance, this could raise your premium by quite a bit.

Here’s an example. If you have a home worth $200,000 and a roof worth $10,000, your roof is 5% of the value of your home. If you put a $40,000 roof on that home, the roof now represents closer to 20% of the value of your home. Since roof damage is responsible for a higher number of claims, this expensive roof could boost your premium by 30% or more.

In addition, the Tesla solar roof is an unproven technology. The warranty is impressive, but if the roof fails, Tesla is on the hook for the cost of the roof ($46,100). Your homeowner’s insurance would be on the hook for the cost of everything that roof protected, which could be significantly higher.

What to Do   

Insurance companies will insure homes with other expensive types of roofs, such as slate, often with a rider. It’s likely that the insurance industry is just going to take some time to catch up with this new technology, and will soon offer options for those who want to install a Tesla or other type of solar roof.

As a consumer, you have two options for homeowner’s insurance for your Tesla solar roof: You can shop around, or you can wait. Shopping around may enable you to find a company willing to insure your solar roof, but you will have fewer options to choose from, which may mean it costs you more.

Waiting will give the insurance companies time to price the risk of this new technology. It will also likely give the technology time to become more mainstream and lower in price, which may decrease your cost not only for the roof itself but for the insurance to cover it.

Since the cost of your solar roof is not dependent on the value of your home, only its size, the cost of the roof will be less of a consideration for more expensive homes. Look for insurance companies to be willing to cover million-dollar homes for solar roofs with riders or premium increases and use the information they gather from claims experience to price the coverage for more moderate homes.

The bottom line is this: solar roofs are a new technology, and, while exciting, should be considered carefully. Before you commit to installing one on your home, make certain you can insure it.