Owning an older home can be a dream come true for many. With their unique sense of charm and character, these antique abodes could become the perfect home for you! However, oftentimes that abundance of character and charm manifests itself as red flags to any prospective insurance provider.
If your home's birthday is nearing triple digits, you may find more problems in not only the upkeep of the house, but obtaining coverage for it as well.
Berry Insurance has been in the insurance game for a while (100 years and counting!), and is well versed with the trials and tribulations that arise when looking to insure your older home.
Insuring an older home is not impossible, but just takes some due diligence to make sure your homestead is properly adapted to modern times.
Why older homes are seen as a higher risk
Many of the dangers that insurance carriers see when reviewing an older home involve the structural aspects that make up the body of the home itself. Everything from the original furnace to copper pipes could present potential dangers for the future of the house's lifecycle.
Insurance carriers will judge the prior loss history of these systems within your home, especially if a repeated loss of the same types shows a habitual problem that hasn’t or cannot be fixed. If a carrier sees your property as a large risk of potential damages and claims, they will generally be less likely to offer coverage until the potential risks are properly addressed.
This is why insurance companies prioritize and offer discounts to newer homes - deals that drop each year as homes age.
Certain carriers have restrictions based on certain construction dates, or may decline insuring potential properties solely based on the age alone. Homes made around 1920 and earlier may warrant limitations and restrictions from insurance carriers.
Areas to address:
The following are areas that consistently present themselves as a high risk for possible damages and necessary repairs in older homes.
Wiring:
Having a home with an outdated wiring and electrical system can increase the risk of fire, and make insurance providers less likely to offer coverage for your property.
An outdated style of wiring that can be found in older homes is called knob-and-tube wiring, derived from the insulating knobs and tubes that are used to run the wiring throughout the house's framing. While state of the art for its time pre 1950s, it now presents itself as a harder to upkeep system that is prone to causing electrical fires.
Similarly, any home that still operates with a fuse box rather than a circuit breaker is guaranteed to be denied coverage until it is replaced.
In most cases, insurance carriers will not write coverage for a home without the wiring and electrical systems being properly replaced. A full rewiring of the home would be the best way to improve the safety of your home and receive the proper coverage it deserves.
Roofing:
A damaged or leaky roof could put risk to your health, possessions, other systems in the home, and is likely to be a cause of claims made to your insurance provider.
Your house’s roof condition is a major factor in determining the cost or offered coverage of your homeowners insurance. In some cases the carrier may refuse to write coverage in this situation, but other times may write the coverage under the restriction that you must repair the damaged roof within the year or they will not renew the policy.
to qualify for a renewal of the policy.
Plumbing:
Any outdated plumbing system increases risk of flooding or possible water backup, and is often requested to be replaced before an insurance company can cover your property.
Heating:
Original heating systems like wood stoves or furnaces can seem like a cozy or practical feature in your home, but could potentially delay your home receiving protection from home insurance.
Things like wood stoves or older furnaces are seen as additional fire risks to your insurance company, and they will usually require it pass inspection and serviced to assure it will not cause any hazards to your home.
Determining the cost of insuring older homes
The overall cost of covering your home is dependent on the status of the systems mentioned above (as well as the factors considered when insuring a home of any age). The total loss history as well as any potential risks seen in the foundational makeup of the home will raise the overall cost.
If insured, any repairs or replacements done to match any of the original systems in your home would be costly to your insurance provider. This is due to the rarity of the materials or expertise needed to repair the original features of your home. Opting instead for a complete overhaul, updating each system to modern standards while still maintaining the charm of the original, can allow your older home to be covered as a newer property and lower the price of coverage.
On average, an older home will tend to be more expensive than a newer model, which makes it important to look into budgeting out replacements of high risk systems in your home to achieve the best (and most cost effective) insurance coverage for you.
Ordinance or law coverage, also known as building ordinance insurance, is an additional coverage that will cover the cost of rebuilding your home if destroyed as well as the cost to upgrade a home's systems to up-to-date standards. The older your home, the higher amount of this coverage you would want to carry.
Protecting the history of your home
While owning an older home can yield a higher premium for homeowners insurance, it isn’t impossible to have the home of your dreams that doesn’t turn into a money pit.
Avoiding filing claims and staying on top of home repairs and maintenance can help in avoiding rate increases, as well as prevent potential damages or losses from occurring.
Reaching out to your insurance agent is a great way to see what ways to best prepare your home for its insurance approval. For more information on what to expect during future home insurance inspection, check out this article: What to Expect from a MA Insurance Home Inspection.
