Make sure your energy savings don’t cost you!
Summer may be over, but the focus on improving our energy efficiency continues through the winter months with various grants and schemes, teamed with a heightened awareness of climate change and reducing our emissions.
With the Ulez rollout, changing weather and ups and downs in energy prices, the focus is firmly on new ways to save.
It’s now pretty common to spot solar panels installed on rooftops across the UK. They are a great source of renewable energy and can reduce the cost of your electricity bill – a huge win given the ups and downs of our fuel economy. And with energy bills still higher than in previous years, and the cost-of-living crisis seeing many of us feeling the pinch.
Maybe you’re thinking about investing in solar panels, or even air pumps, for your own home, particularly as energy bills increase over winter?
Your first consideration might not be how they’ll affect your insurance, but it’s important to know that you’ll be covered if something goes wrong. We regularly advise our clients about underinsurance, and how it is a major problem, affecting millions of homes. Many don’t realise that they could be underinsured, and the risks this poses.
Here at Howden, we want to ensure you have all the facts at hand before making the decision, and understand how to ensure you are not underinsured while you’re trying to make savings.
Do you need planning permission for solar panels?
In the UK, you do not need planning permission to install solar panels, because they are considered ‘permitted development’. However, if you live in a listed building, a conservation area or a national park, there could be additional restrictions that prevent you from having solar panels.
You should also register your new solar panel device with your Distribution Network Operator (DNO). This is the company responsible for bringing electricity to your home. Your installer may register the device for you but check if you need to notify the DNO before or after installation. The UK Government has advice on how to register your new energy device in England, Scotland and Wales.
Do solar panels and air pumps add value to your home?
It’s quite possible that solar panels will increase the value of your home, because they can make it more energy efficient and environmentally friendly. They can make all the difference to the longevity of your home, as when you retire on a fixed income, you know your bills will remain more affordable making it more likely you can stay in the property.
And, of course, the prospect of cheaper electricity bills and a house with better energy performance can be attractive to buyers, if you decide to sell your property. EPC ratings are growing in importance when it comes to house buying, whether you’re looking to buy and secure a more favourable mortgage or letting your property.
A word to the wise, however. Many people have learnt that it is not a good idea to borrow from solar companies to pay for your solar panels. It can lead to issues if you come to sell your home, as a lien (loan agreement) will be placed on your home which would need to be declared on selling your property, and the prospective buyer may find it difficult to get a mortgage. Buying a house with fully owned solar panels is completely different, because there is no lien.
Are solar panels covered in your home insurance?
You should always inform your insurance provider about any major changes that you’re making to your home, including solar panels or air pumps. It’s important to make sure you’re properly covered. Your provider will need to account for the cost of replacing the panels, if anything were to happen to them.
As well as adding to your home’s market value, solar panels or air pumps may increase its rebuild value, which is the cost to totally rebuild your home if it were destroyed. Now, that’s not to say your premiums will automatically increase, it just means that you have notified the insurer that, should the worst happen, you’ll be covered.
The best course of action is to speak with a broker, who can help you navigate your current insurance policy, and whether solar panels or an air pump can be included in your cover, at a budget that’s right for you. Here at Howden, we have access to a huge panel of insurers, and take the heavy lifting out of it to help find the right coverage for your particular requirements, so just ask us.
It may seem overwhelming, but it’s crucial that you have the right cover because the stress and price of having to restore your house if you’re underinsured would be enormous!
The cost of solar panels has decreased substantially over the past decade but it still isn’t ‘cheap’. Installation of a 4kW system (the average size for most homes) is around £5,000, which can be hard to come by if you aren’t covered.
If you opt for an energy-saving air pump, the Energy Savings Trust estimates that this could cost anywhere between £7,000 to £13,000 to install – and fork out for yourself if you omit to declare it on your home insurance.
Is my home underinsured?
The cost-of-living crisis caused many of us to cut back on costs and find alternative ways to save on our energy bills, but reducing or even cancelling your home insurance entirely could be a costly mistake. Underinsurance has long been a concern that our branch advisors warn clients about and, if you don’t use a broker like Howden, you may not be aware of the risks.
Research from rebuild experts indicates that the number of underinsured properties is growing:
A staggering 83% of buildings surveyed between September 2021 and August 2022 were found to be underinsured, compared to 80% in the prior 12 months.
On average, these buildings were insured for just 66% of what they should have been. The percentage last year was 68%, so the buildings underinsurance gap is actually widening in the UK!
This gap is biggest among buildings insured for up to £500,000, which are on average only covered for 51% of their rebuild cost.
For most of us, our home is the most expensive investment we will ever make, so insurance is critical to protecting your investment, and with such a stressful mortgage market, it’s now more crucial than ever before.
Talk to an expert
We understand how managing your insurance policies can be intimidating – that’s why we’re here when you need us. Our friendly branch advisors are insurance experts, who can help find tailored coverage that’s right for you. Simply give your local branch a call, or pop in to speak with an advisor in person.
Sources: BBC News, Energy Savings Trust, Gov.UK, RebuildCostAssessment, Federation of Master Builders
