Your Solar Company Went Bankrupt. Who's Actually Insuring the Panels on Your Roof?

Your Solar Company Went Bankrupt. Who's Actually Insuring the Panels on Your Roof?

Two things are colliding on California rooftops right now, and almost nobody is connecting them.



The first is the wave of solar installer and lender bankruptcies that's hit the state since 2024 — Freedom Forever, Simply Solar LLC, Harness Power, SunPower, Sunnova, and the lender Mosaic among them.

The second is the collapse of California's home insurance market. The California Department of Insurance approved a 29.1% average rate hike for the California FAIR Plan — the state's insurer of last resort — effective on all new and renewal business October 15, 2026. It's the largest increase the FAIR Plan has taken in its history, and it lands after the plan absorbed roughly $4 billion in claims from the January 2025 Los Angeles wildfires.

Neither of those stories is new on its own. What almost nobody is asking is what happens when they overlap on the same roof: a homeowner whose solar company is gone, whose private insurer has non-renewed them, and whose FAIR Plan policy was never built to cover solar equipment in the first place.

Who's Actually Supposed to Insure Your System

This depends entirely on how you financed your solar, and most homeowners never learn the distinction until something goes wrong.

If you have a solar lease or PPA, you don't own the panels — the solar company does. Standard contract language (and Fannie Mae's underwriting guidelines for mortgages on homes with leased solar) requires the equipment owner to carry general liability insurance covering damage from installation defects, malfunction, or manufacturing problems, and to handle repairs. The homeowner isn't supposed to insure equipment they don't own, and the solar company isn't supposed to be listed as a loss payee on the homeowner's own policy.

If you have a solar loan, you own the system outright. That means the panels are your asset, their replacement cost belongs on your dwelling coverage limit, and insuring them is entirely on you.

The lease/PPA structure works fine as long as the solar company is a going concern with an active general liability policy. It stops working the moment that company files Chapter 11 or disappears entirely.

What Happens When the Lessor Goes Bankrupt

When a solar lessor files for bankruptcy, its contracts — including its obligation to insure and maintain the system — typically get assumed by a successor entity, sold off, or left in limbo during the proceeding. In the meantime:

• The general liability policy that was supposed to cover installation defects and malfunctions may lapse or go uncollectible during the bankruptcy.
• Nobody is proactively telling homeowners this happened. You find out when you file a claim, not before.
• If a fire or damage traces back to faulty workmanship from an installer that no longer exists with functioning insurance behind it, you may be left arguing over a policy that effectively isn't there anymore.

This is a different problem than the loan-obligation question we've covered elsewhere — your financing payment and your system's insurance coverage are two separate issues, and a bankruptcy can knock out the second one while leaving the first fully intact.

Why the FAIR Plan Doesn't Close the Gap

If your own insurer non-renews you — which has become routine across wildfire-exposed counties — the FAIR Plan is often the only path left. But the FAIR Plan was built as a bare-bones fire policy, not a substitute for full homeowners coverage, and its limitations matter a lot if solar equipment is involved:

FAIR Plan Dwelling Policy — what it does and doesn't cover for solar:
Covers: Fire damage to the dwelling structure and permanently attached equipment, including solar panels, subject to policy limits
Does not cover: Equipment breakdown or mechanical/electrical failure
Does not cover: Workmanship or installation defects
Does not cover: Theft
Does not cover: Personal property or liability claims
Typically requires: A separate Difference in Conditions (DIC) policy to fill the gaps above

So even in the best case — your own insurer non-renews you, you land on the FAIR Plan, and you're not dealing with a bankrupt lessor — you still need a DIC wrap specifically to cover the things a leased or financed solar system is most likely to need: equipment failure, workmanship problems, and liability. Most homeowners pushed onto the FAIR Plan mid-crisis don't know to ask for one.

Stack a bankrupt lessor with no active general liability coverage on top of a FAIR Plan policy with no equipment-breakdown coverage, and you can end up with a solar system that nobody's insurance touches at all.

Red Flags: Signs You Have a Coverage Gap

• You received a non-renewal notice from your homeowners insurer and haven't independently confirmed whether your solar lessor's general liability policy is still active
• Your solar company has filed for bankruptcy, been acquired, or gone dark (no working phone number, no functioning customer portal)
• You're on the FAIR Plan without a Difference in Conditions policy layered on top
• Your lease or PPA contract is silent, vague, or outdated on which party carries insurance and at what limits
• Nobody — not your solar company, not your home insurer — has confirmed in writing who pays if the system causes damage today

What to Do About It

1. Pull your lease or PPA and find the insurance clause. It should name who carries liability coverage and at what minimum limits.
2. Call your solar company directly and ask for proof of current general liability coverage. If the company is in bankruptcy or unreachable, that silence is your answer.
3. Call your homeowners insurer and describe your solar setup exactly — lease, PPA, or loan — and ask them directly whether panel damage, fire from faulty installation, or equipment breakdown is covered under your current policy.
4. If you're on the FAIR Plan, ask specifically about a DIC wrap. Independent agents who write FAIR Plan business can usually place one.
5. File a complaint with the California Department of Insurance at insurance.ca.gov or 1-800-927-4357 if you believe an insurer used solar equipment as a pretext for non-renewal or improperly denied a claim.
6. If your lessor's bankruptcy has left your system's insurance status genuinely unresolved, that's a material change to the contract you signed — and it's worth a professional review of your exit options, not just a wait-and-see approach.

Frequently Asked Questions

Does my homeowners insurance automatically cover leased solar panels?
Not necessarily, and it shouldn't in the way you'd expect. On a lease or PPA, insuring the equipment is contractually the solar company's job. Your homeowners policy generally covers the structure and may pick up fire damage to attached equipment, but equipment breakdown and workmanship defects are the lessor's responsibility — until the lessor is gone.

If my solar company goes bankrupt, does my system become uninsured overnight?
Not automatically, but it can happen quietly. Bankruptcy proceedings can leave insurance obligations unresolved for months while contracts get sorted, sold, or discharged. The only way to know your actual status is to ask directly and get it in writing.

Will the FAIR Plan cover a fire caused by faulty solar installation?
Only the dwelling damage from the fire itself, and only up to policy limits. Workmanship-related liability and equipment breakdown are excluded and require separate coverage.

Does an insurance gap give me grounds to cancel my solar contract?
It can, depending on your specific contract terms and what the agreement promised about ongoing insurance and maintenance. A gap like this is exactly the kind of material breach worth having reviewed.

Stuck with a bankrupt solar lessor, a non-renewal notice, or a policy that no longer makes sense for what's on your roof? California Solar Exit reviews solar contracts for homeowners across Los Angeles, Orange County, San Diego, Riverside, San Bernardino, Sacramento, and the Bay Area. Call (213) 579-5156 for a free review, or book a consultation online.

Daniel Merritt, Senior Solar Contract Analyst
California Solar Exit — this content is for general informational purposes only and does not constitute legal advice or create an attorney-client relationship.