Homeowners adding solar panels study energy savings and break-even costs, but they should also call their insurer: Some increase premiums and some cancel policies.

FORT LAUDERDALE, Fla. – As electric bills surge and the federal government offers generous tax incentives for renewable energy investments, more and more Florida homeowners are seriously considering rooftop solar systems.

But in calculating system costs vs. electric bill savings, many would-be solar owners are neglecting to consider how a solar system will affect their home insurance bill – or how difficult it might be to find a company that will insure them at all.

And with insurance premiums skyrocketing for all Florida homeowners, solar customers who can obtain coverage might also find that the price increase will wipe out any energy-cost savings they expected from going solar.

“It’s a big deal and a lot of folks don’t realize that many carriers don’t accept solar panels,” says Dulce Suarez-Resnick, vice president at the Miami-based agency Acentria Insurance.

Oakland Park homeowner Holy Strawbridge learned this the hard way. She installed a modest 8,000 kilowatt system atop her home about two years ago and recently signed up for coverage with Edison Insurance Company. After the insurer sent an inspector to her home, she received a letter canceling her entire policy.

“I was shocked,” Strawbridge said. “I’ve never filed an insurance claim and I’ve lived in this house since 2001.”

The reasons cited in the cancellation letter sent by Edison: Her solar panels are ineligible for coverage due to the age of her roof (11 years) and because she has a tile roof.

Those aren’t the only reasons insurers won’t cover rooftop solar systems, according to interviews with solar installers, solar energy advocates, and insurance agents. Insurers who do business in Florida offer a wide variety of reasons for refusing to insure homes with them.

Net metering flagged by insurers

Increasingly, insurers are claiming that solar systems with net metering connections to utilities – which is virtually all of them in Florida – pose a unique risk of injury to line workers and damage to the utility grid.

Florida Power & Light’s net metering contract requires homeowners to take responsibility for all potential damages, says Ryan Papy, president of Palmetto Bay-based Keyes Insurance. “So if there’s a surge running through your panels that causes damage to the grid or other homes, the client is responsible.”

Solar installers and advocates call that justification unfounded. They say all equipment used to connect rooftop solar systems to the grid comply with state building and electrical codes and are inspected by utilities before new systems are activated. Utilities also have authority to come onto solar owners’ properties and disconnect them if they suspect any safety issues, they say.

Solar advocates wonder if the net metering concerns are just excuse insurers are giving to justify dropping customers.

Many insurers who operate in Florida, faced with mounting losses, have been dropping or nonrenewing policies to reduce the amount of overall risk they carry on their books of business. In some cases, state insurance regulators have ordered insurers to shed policies so they can afford to purchase reinsurance – insurance that insurers must carry to be able to pay all claims after a catastrophe.

Justin Hoysradt, president of Vinyasun, a solar installation company based in West Palm Beach, says the potential dangers of backfeeding are exaggerated. Since 2006, all power-producing inverters have complied with an electrical standard called U.L. 1741, Hoysradt said. This standard requires solar system inverters to be able to detect utility outages or any odd voltage disruption and automatically disconnect the solar systems from the grid.

Hoysradt says he is unaware of any documented instance of injury or damage from a properly installed UL 1741-certified inverter. The cut-off technology is so dependable that utilities recently removed a requirement that solar systems be equipped with separate redundant manual lockable disconnects, he said.

Until about a year ago, Hoysradt rarely heard customers complain that they couldn’t find or keep insurance because of their solar systems. Now, at least one potential customer a day says their insurer could not guarantee they wouldn’t be dropped if they install solar, he said.

Other insurers have told homeowners that net metering turns them into commercial utilities and they are no longer eligible for homeowner insurance policies, said Heaven Campbell, Florida program directors for Solar United Neighbors, a nationwide nonprofit that helps solar customers form co-ops to secure better pricing. Campbell says her organization has documented about 60 homeowner complaints over the past year. They either say they’ve been cancelled after installing solar panels or told they would no longer be eligible for coverage if they install panels, she said.

Insurer cites numerous concerns

Olympus Insurance laid out an extensive list of concerns about property and liability exposures in a 2020 filing with the Office of Insurance Regulation, while seeking approval to exclude solar systems from the risks it must cover. They included increased exposure for damage due to wind uplift when solar panels are attached to a roof, increased exposure for wind or hail damage to the solar system itself, fire hazards from loose or poorly connected parts or wires, increased risk or electrocution, presence of toxic materials and byproducts of the panels themselves, and potential liability associated with backfeeding to the grid.

Without commenting on the validity of the concerns, the Office of Insurance Regulation told Olympus it could not allow a broad mandatory exclusion for coverage of solar unless the company provided an option for solar owners to “buy back” the coverage at an increased price. Olympus withdrew the filing. It could not be immediately determined from the office’s filing database whether the company resubmitted it with the buy-back option.

Campbell disputes claims that rooftop solar systems make roofs more susceptible to wind uplift during hurricanes. She said after Hurricane Michael struck the Panhandle in October 2018, many roofs with solar panels remained intact amid roofs without solar panels that were destroyed.

Solar United Neighbors’ website contains numerous photos of installations that held up in storms that damaged roofs of surrounding homes. Campbell says modern building codes actually make roofs with solar panels better able to withstand winds.

Paul Handerhan, president of the consumer focused Federal Association for Insurance Reform, said concerns about wind uplift stem from the potential for increased damage if solar panels and roofs are torn from homes together.

Suarez-Resnick concurs: “With stronger winds like a Category 3 hurricane, you might have much more damage if panels go flying and land on your neighbor’s roof or car.”

Companies that do insure rooftop solar systems are allowed to set strict conditions for that coverage, filings show.

Edison, the company that cancelled Strawbridge’s policy, will only cover homes with solar systems that were installed after 2016, on shingle or metal roofs no older than 10 years, on flat roofs no older than five years, and produce no more 10 kilowatts of electricity, which is more or less the typical rooftop system capacity.

As Strawbridge found out, Edison will not insure solar systems mounted on clay or tile roofs. Stacey Giulianti, chief legal officer at Florida Peninsula Insurance Company, parent company of Edison, said, “We chose not to insure solar panels on tile roof homes due to the challenges presented by the attachment of the panels to the roofs. Most tile roof installations require attachment brackets which must pierce the tile roofs.”

Solar panels are routinely installed without piercing tiles, Hoysradt said. Many installers remove clay tiles at the point where solar posts attach to the roof and replace them with aluminum tiles that won’t break or crack when drilled.

Hoysradt noted that state licensing requirements for solar installers require knowledge of roofing, electrical and plumbing construction. “We’re not just a bunch of people taking roofs apart with no experience,” he said. “There’s no reason for insurance carriers to not cover solar on a tile roof.”

Nevertheless, rooftop solar consumers can expect to find a hodgepodge of insurance rules unless and until the state Legislature decides to enact common coverage standards.

Common standards for insuring solar?

The national trade organization Solar Energy Industries Association is working with fellow solar advocacy groups Florida SEIA, Solar United Neighbors and Vote Solar to reach out to insurers and try to develop legislation to eliminate confusion about insurance practices, said Will Giese, the association’s Southeast regional director.

The good news for Strawbridge and other solar owners is there are insurers that do not prohibit coverage of homes with solar systems or impose a long list of restrictions on coverage. They include state-owned Citizens Property Insurance Corp., the so-called “insurer of last resort.”

Citizens covers solar systems as part of the structure. No special endorsements or add-ons are required, spokesman Michael Peltier said. “They would just be added into the replacement value of the home,” he said. Of course, adding solar panels increases the value of a home, so homeowners can expect to pay a higher premium when they add solar.

One mistake a homeowner should never make: Installing a solar system without checking insurance options, Suarez-Resnick said. An agent can tell you whether your roof is nearing the end of its life and should be replaced first. It’s a pain to find new insurance, and it’s costly to remove and replace solar panels because Citizens or another insurer demands that you get a new roof.

Or you might look for a solar installer, like Universal Contracting and Solar, that specializes in bundling roof replacements and solar installations. You can get long-term financing and qualify for the 30% federal tax credit to offset cost of the combined job, says Jenifer Kempka, the company’s director of business development.

“Right now is the best time to go solar,” she said.

Investors consider a 60/40 stock/bond portfolio standard, but real estate has provided solid returns over the past 12 months, convincing many to diversify.

LAS VEGAS – Stocks and bonds have always been the main source for investments across the United States. In fact, the 60/40 stock/bond portfolio is a standard that most investors follow.

However, following that trend cuts out one of the most stable investments out there in today’s market: real estate. For the last 12 months, ending June 30, 2022, the S&P 500 was down 11%, Dow Jones Index was down 14% and Nasdaq was down 22%. The volatile Bitcoin went down 68%.

Meanwhile, multifamily real estate rent amounts continued to increase during that same period, and home values on sale continue to trend up, meaning profits continued to climb for investors.

Real estate investors are finding value in multifamily real estate. Annual rent for multifamily properties grew an average of 13.5% during 2021. In fact, multifamily properties continued to generate the highest average returns among real estate classes in 2021, a trend that has been going on for the last 40 years.

Another point to consider is that real estate does not follow the typical stock market swings. While stocks and bonds follow the stock market ebb and flow, multifamily properties are independent of those swings. While this may mean that real estate doesn’t see large swings in returns and losses like some stocks do, it does mean that return profits are more stable and constant.

For example, in 2021, a portfolio with a breakdown of 50% stocks, 30% bonds and 20% multifamily real estate had an annualized return of 18.5%, as compared to a portfolio of 60% stocks and 40% bonds, which had an annualized return of 15.9%.

While multifamily properties may give the strongest average total return, according to a 2017 report by CBRE Research, there are other types of properties that give average total returns over 9% as well. Multifamily (9.75%), hotel (9.61%), industrial (9.57%) and retail (9.44%) all give strong returns, with office properties averaging an 8.38% total return.

The reason that multifamily properties top the list? Millennials have a strong desire for rental properties, while baby boomers have started renting more, as well.

Lease agreements for multifamily rentals also typically last just one year, allowing for faster increases over office, industrial and retail leases, which are typically five years or more.

Mike Ballard is the co-founder of Camino Verde Group, a Las Vegas real estate investment and development firm, and is involved in the development of more than $200 million of multifamily or mixed-use real estate in California, Nevada, Texas, South Carolina and Utah.

Landlords, large and small, are lining up to buy homes as investment properties. A recent study found 1 in 5 homes sold in the U.S. in 2020 were bought by investors.

PASADENA, Calif. – Home shoppers aren't just competing against each other in bidding wars these days. Landlords, large and small, also are lining up to buy homes to use investment properties, according to a recent study by Irvine-based John Burns Real Estate Consulting highlighted by the Wall Street Journal.

About one in five homes sold in 2020 were purchased by investors, both nationwide and in Southern California, the study found. It could be institutional investor groups, publicly traded companies, pension funds, and even large foreign behemoths.

Locally, however, mom-and-pop ventures are responsible for most Southern California investor purchases because of the region's high home prices.

First-time homebuyers and other low-down-payment buyers (less than 20% down for example) cannot compete. The big boys come in with cash. They have the financial resources to win every bidding war. No contingencies. No fuss. No muss. Close fast as you can.

First-time homebuyers rightfully want a property inspection and need a mortgage. The mortgage typically requires an appraisal. Takes time. If the appraisal comes in short of the sales price the listing agent and the seller get to repeat the solicitation process because the buyer may not be able to cover the shortage with such few shekels.

Even before COVID-19 hit, I noticed fewer and fewer low-down-payment buyers capturing the prize. Plenty of dusty pre-approval letters sit on my desk. And sit.

Buyers get rejection fatigue. Many commission-compensated realty agents figure out they are throwing good time after bad as offer after offer gets turned down. The first-timer buyers who receive down payment help from mom or dad, for example, eventually get offers accepted after coming up with the 20%.

From all accounts, the single-family rental industry genesis took hold during the Great Recession. As 6.3 million families lost their homes to foreclosure between 2007 and 2013, according to Black Knight, large operators with a lot of cash were able to buy homes in bulk.

Large-scale operators have figured out how to operate at scale within the past five or 10 years. Technological advances include virtual showings, keyless entry and digital leases, according to a podcast interview posted by the National Rental Home Council, a non-profit trade association of the single-family rental industry.

That tells me this competition with consumer home purchasers is just going to get worse.

Depending on whom you ask and what their definition of large corporate landlords might be, somewhere less than 5% of single-family rentals are owned by large operators. Mark Zandi, chief economist of Moody's Analytics, thinks it's less than 5%. John Burns of Burns of John Burns Real Estate Consulting thinks it's less than 2%.

Orange County is a leading indicator. It is shocking to learn that 3.5% of all Orange County residential 1-4 unit parcels are owned by corporate entities with portfolios of 200 or more properties, according to ATTOM Data Solutions. That's nearly 30,000 residences out of 846,000 parcels behind the Orange Curtain are owned by these behemoths.

Los Angeles County and Riverside County both measure at 0.05%, and San Bernardino County is at 0.01%. Statewide it's 0.09%.

The U.S. has nearly 1 million residential properties (out of a 101 million total 1-4's, including attached condos) owned by the large operators, ATTOM figures show.

Roughly 35% of residential properties are renter-occupied. John Burns estimates there are a total of 15.2 million single-family and condo rentals across the U.S.

Virtually every economist looks at how homebuilding has failed to keep pace with demand. Freddie Mac Chief Economist Sam Khater recently wrote the U.S. housing shortage increased to 3.8 million units by the end of 2020.

Build 'em and they will come. Maybe not. An industry colleague in Tampa, Florida recently explained how an entire subdivision of more than 50 newly built homes was snatched up by an institutional investor. Talk about scale. Talk about cutting out the consumer competition.

This is a vicious cycle that just feeds on itself. The more properties acquired, the more upward pressure there is on home prices and rents. A million homes now. What's it going to be in five short years?

Besides the supply-side challenge, a lack of foresight and disappointing U.S. government policies may lead to the U.S. becoming a rental nation at the expense.

President Biden’s latest spending proposal includes a $15,000 tax credit for first-time buyers. That buyer might not be able to use the tax credit if he or she doesn't have a boatload of down payment money.

The American Dream has been real for so many as a form of stability and family wealth building. Consumers who want to own and can afford to own should be first in line. Competition should not apply in this case.

What policy changes can be made to slow down the large-scale landlord industry? Irvine CPA Marcello Sroka suggests an excise tax. He points to cigarette and alcohol excise taxes as ways to discourage certain behavior.

Such a tax would need to hurt enough to discourage them from buying and owning rentals.

Copyright © 2021 Pasadena Star-News, Jeff Lazerson. Lazerson is a mortgage broker.

An HOA rule mandated that only tenants – no guests – could use the pool, and it shut down the entire pool for a day after someone broke that rule. Is that legal?

FORT LAUDERDALE, Fla. – Question: The Board of our Homeowners Association recently reopened our pool for tenants only (no guests or family). Twice residents were observed bringing in guests, and as punishment, the board closed the pool to all residents the next day. Can the board punish all residents because of another resident’s action? – Bill

Answer: Your association’s board of directors and management have certain powers afforded to them by law and your community’s controlling documents. This makes them more akin to a business’s manager than a governmental body.

While your board does have certain powers and responsibilities, parental powers are not among them. Your board only has a limited right to fine violators for violating community rules. It cannot attempt to exact revenge on offenders by embarrassing them or trying to ostracize them from their neighbors by arbitrarily closing a community amenity due to their infraction.

Your community cannot act like my boot camp company commander and make everyone do pushups because one recruit did not salute properly. Nor is your community a business that reserves the right to refuse service. It is its residents’ home.

Other attorneys may disagree with me because the law is not settled.

Still, I believe a community association cannot exclude valid guests from using community amenities along with their resident host.

In reaction to the pandemic, your community may limit the number of people that can use the recreational facility at one time, require social distancing, ban people showing flu-like symptoms, and take other safety measures. These restrictions should be applied equally to all residents and their guests.

Each resident has the right to enjoy both their home and the common areas with whom they choose. This may cause residents to have to sign up in advance to use amenities and create other logistical problems, which is probably what your association is trying to avoid.

Your board members are trying to do their best during a difficult time, so if you address this issue with your board, remember that they are your neighbors volunteering for the difficult and often thankless job of managing your neighborhood.

© 2021 Sun Sentinel (Fort Lauderdale, Fla.), Gary M. Singer. Distributed by Tribune Content Agency, LLC