The heat pump trap that might render your insurance worthless

Homeowners are under pressure to significantly reduce their household emissions, but doing so might cost thousands of dollars to install, and you may also have to pay a higher insurance premium as a result.

These expenditures on your property are costly. According to the Energy Saving Trust, installing a heat pump can cost between £7,000 and £13,000, while installing a standard solar panel system can cost £5,500.

Yet, you can incur greater fees or discover that part of the gear won't be covered at all if you decide to insure your house in case something goes wrong.

Be aware of insurance exclusions.

Low-carbon technology is now not generally covered in insurance documents because it is a relatively new field for insurers.

Overall, solar panels are covered by building insurance, but often only if they have been expertly installed and are being utilised in accordance with the manufacturer's guidelines. This implies that events like fire or damage to these systems would be covered for your system.

In spite of this, James Daley from Fairer Finance issues a warning that some insurers do not cover storm damage to solar panels under their building policies. Hastings Direct is one such insurer; nonetheless, in the event that your solar panel system damages your home's construction, it is covered by its policy. In light of this, it is usually a good idea to read the fine print.

Many insurers, including Esure and HSBC, have exclusions for claims involving solar heating systems, according to Mr. Daley.

It may not come as a huge surprise to learn that some businesses are excluding this given the high expense of maintenance to these systems.

Should something happen, individuals may be severely out of money if they believe they are insured when they are not. There are worries that some people would be discouraged from switching to low-carbon technologies.

Insurance rates can increase.

As more homeowners opt to install heat pumps and solar panels, more insurers will probably update their policies to include these additions and make it clear what is and isn't covered.

According to specialists in insurance, this might result in a small increase in premiums.

In the first three months of 2023, the average cost of house insurance (including buildings and possessions coverage) was £315, up 6% from the same period in 2018, according to the most recent statistics from the Association of British Insurers (ABI).

The trade organisation attributed this to a number of elements, including an increase in weather-related insurance claims and more expensive building supplies. It went on to say that the cost of construction has increased as a result of the conflict in Ukraine, rising energy prices, and the ongoing effects of the Covid epidemic (including a scarcity of raw materials as a result of plant closures due to lockdowns).

Risk of theft

The fact that heat pumps are situated outside of your property and may thus be vulnerable to theft is another concern that may result in higher home insurance premiums.

If the net zero addition is exterior to the house, such as a heat pump, this might raise the danger of theft, according to Helen Rolph of the insurance comparison website Quotezone.co.uk. This will need to be considered by the insurer when evaluating the risk and determining the premium.

The danger of theft may be reduced by taking measures like putting heat pumps out of sight wherever feasible or installing home security cameras, according to Phil Nichols, head of home underwriting at insurer Policy Expert.

Using a cage to protect an external item can also be beneficial.

(Sources: telegraph.co.uk, fairerfinance.co.uk, abi.org.uk, quotezone.co.uk)