A push for green technology meets resistance
Adam Szabo, a resident of Burlington, Ontario, was excited to enhance his home’s efficiency by replacing his traditional furnace with a heat pump and installing solar panels to power both his new electric heating system and electric vehicle. Szabo viewed this upgrade as a win-win: improving his home’s value, reducing environmental impact, and offering financial savings in the long run. His wife and young daughter supported the change, anticipating a greener, more sustainable lifestyle.
However, this optimism soon met with frustration when Szabo’s insurance company, CAA, raised concerns over his new heat pump and solar panels. First, the heat pump installation prompted threats of policy cancellation. When he added the solar panels, his insurance was terminated altogether. Szabo was left bewildered. How could such environmentally friendly upgrades, which aligned with Canada’s net-zero goals, create issues with his home insurance?
Szabo’s case is not unique. Many Canadians, driven by government incentives and a desire to combat climate change, are transitioning to renewable energy. However, like Szabo, they find themselves unprepared for the opposition they encounter from their home insurance providers. Homeowners from across Canada have shared similar stories of insurance denials or cancellations due to the installation of solar panels or other green technologies.
The insurance industry’s perspective
While homeowners view their solar panels and heat pumps as modern improvements, some insurance companies see them differently. According to Rob de Pruis, a spokesperson for the Insurance Bureau of Canada, insurers approach green technologies cautiously. Many companies, he explains, lack sufficient claims experience with solar panels and other newer technologies, making them uncertain about potential risks and future costs. This uncertainty translates into hesitation in providing coverage.
De Pruis acknowledges that some solar panels can pose risks, particularly in terms of damage during extreme weather. Panels that are not securely installed could become detached during storms, causing damage to the property or surrounding areas. Additionally, hail can damage the panels themselves. Even though most North American solar panels are designed to withstand winds of up to 225 km/h, equivalent to a Category 4 hurricane, the lack of widespread claims experience makes insurers wary.
Insurers also point out that solar panels increase a home’s replacement value. If a home with solar panels sustains damage, the cost to repair or replace the panels adds to the overall cost of claims. For insurance companies operating in a competitive market, these factors present enough uncertainty to either increase premiums or, in some cases, deny coverage entirely.
Szabo’s insurer, CAA, argued that the heat pump and solar panels represented unfamiliar territory. Despite decades of solar technology being available, CAA’s reluctance mirrored the stance of other insurers, illustrating a broader industry trend.
Finding solutions and alternative coverage options
Szabo, undeterred, contacted his local Member of Parliament, concerned that such insurance obstacles could deter other homeowners from adopting green technologies. His experience underscores a significant challenge: while the Canadian federal government promotes a transition to renewable energy, including subsidies and incentives for solar panel installation and electric vehicles, the home insurance sector lags behind in supporting these changes.
After extensive negotiations and providing detailed technical specifications for his heat pump and solar panel system, Szabo managed to retain insurance coverage for his home — but only for the heat pump. His solar panels remained a sticking point. Ultimately, Szabo had to switch to another provider, Pembridge Insurance, to maintain coverage for his solar-equipped home. Pembridge, backed by Allstate Canada, offers up to $60,000 in coverage for the replacement cost of solar panels under its property policies.
Kevin Cowie from Aylesford, Nova Scotia, had a similar experience. Four years after installing solar panels on his home, Cowie discovered that his insurer, Aviva Canada, was reluctant to provide coverage. Like Szabo, he was surprised that, despite federal encouragement to adopt green technology, insurance companies seemed unprepared to handle the shift. Eventually, Cowie also found coverage with Pembridge, though his experience highlighted the growing divide between policy goals and the insurance industry's response.
While Aviva Canada has been insuring homeowners with solar panels since 2011, Cowie’s and others’ experiences point to inconsistencies. Aviva recently announced updates to its policies: starting in October 2023 (and in Quebec by March 2025), the company will offer up to $100,000 in coverage for renewable energy equipment, including solar panels, without requiring an additional policy endorsement. This marks a shift toward more inclusive coverage but comes too late for many homeowners who already encountered obstacles.
The role of government and industry collaboration
The conflict between renewable energy adoption and insurance challenges highlights a broader issue. While the federal government pushes for reduced emissions and greener technologies, the home insurance industry has yet to fully adapt. De Pruis from the Insurance Bureau of Canada suggests that part of the problem stems from the industry’s competitive nature, which limits its ability to aggregate and share risk data related to solar panels and other technologies.
For homeowners, De Pruis advises against assuming that all insurers will reject their green upgrades. Shopping around, asking questions, and conducting thorough research may reveal better options, even if one company denies coverage. Additionally, he encourages industries involved in renewable energy to share research and risk data with insurers to help them better understand the potential risks and benefits.
Szabo, however, believes that insurance companies should be more proactive. Given the clear direction toward cleaner energy and the importance of reducing carbon footprints, he argues that insurers should be at the forefront of embracing green technology rather than resisting it. His case, alongside others, highlights the need for better alignment between Canada’s energy transition goals and the policies of industries like insurance, which play a crucial role in supporting homeowners.
As Canada accelerates its push toward a net-zero emissions future, homeowners like Adam Szabo and Kevin Cowie illustrate the challenges that come with adopting green technology. While federal incentives encourage solar panels and heat pumps, homeowners are often caught off guard by the reluctance of insurance companies to cover these advancements. The experiences of Szabo and Cowie reflect a growing need for greater awareness, policy consistency, and industry collaboration to ensure that going green doesn’t come at the cost of home insurance coverage.
For homeowners considering renewable energy upgrades, careful research into insurance policies and a willingness to explore different providers may be necessary. As the insurance industry adapts to the growing demand for green technologies, broader cooperation between the government, green industries, and insurers will be crucial in overcoming these challenges.
source: CBC
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