Finding coverage can be complicated, but a bit of preparation will ease your search.
Going in on an older home typically means taking on some updates and additional costs that you expect from the get-go. What you may not realize is the cost of home insurance is often higher for older homes, and that it can sometimes be difficult to find an insurer willing to cover your pride and joy.
How to find the right coverage
Ideally your older home is in reasonable condition and you have no trouble finding an affordable policy. However, if you struggle to find an insurer willing to take you on, it’s likely worth working with an experienced insurance agent who specializes in harder to insure homes.
You may also need to make specific home upgrades or repairs if you want to maintain coverage or get a better rate. Some projects might include:
- Updating the electrical wiring
- Updating outdated appliances
- Replacing the plumbing
- Installing a new roof
- Adding a home security system
- Adding a sprinkler system
How to choose the right coverage level
Remember that actual the cost of replacing certain features, making repairs and even rebuilding can be much more than the assessed value of the items.
- Simple repairs may not meet modern codes and could require additional construction
- Updated replacement appliances may require new or different hookups
- Replacement materials may be rare and therefore more costly than what’s used today
Find coverage for your older home
Why are older homes harder to insure?
As a general rule, older homes present a higher risk to insurance companies. Three main factors contribute to that risk.
- Older homes may be more likely to suffer damage.
Out-of-date materials simply might not stand up to storm damage. Likewise, deteriorated plumbing and electrical wiring may not get updated and pose the risk of expensive damage. - The amount of repair work might be substantial.
Depending on the size of the renovation project and the home insurer you choose, your policy may not cover you while your home is being renovated. Even if your provider is happy to continue coverage while your home is being renovated, it might be at a high premium. - Repairs done to match the rest of the dwelling can be expensive.
Making sure the repair work is historically accurate can be a costly exercise, with materials and labor expenses higher than if you simply needed a standard rebuild.
What to keep in mind when insuring an older home
Insurance is often one of the last things you think about when buying a home. But if you’re about to sign the contract to purchase an older home, remember there are several factors that can affect your home insurance.
Roofing
A roof in a poor state of repair could cause you trouble when it comes to finding coverage. A damaged roof can cause all manner of problems, from not protecting your possessions and the electrical system to affecting your health.
Roof condition is one of the key factors insurers will consider when determining the cost of insurance. The age of the roof, the materials used in its construction and its current state of repair will all be taken into account.
You should also be aware that claims resulting from leaky roofs caused by a lack of maintenance are commonly rejected by insurers, so you’ll need to make sure you keep your roof in tip-top shape.
Wiring
An outdated electrical system greatly increases the risk of fire. Knob and tube wiring, which is common in houses built before World War II, can be a particularly frequent cause of problems.
A full rewire of the house could be a major priority for the safety of your family, on top of being a requirement if you want to take out home insurance.
Plumbing
An outdated plumbing system increases the risk of flooding and sewage backup, so the ancient plumbing in your old home won’t be seen as a feature by insurers.
Before agreeing to cover you, an insurer may request the outdated plumbing system in your home be replaced within a certain timeframe, so you’ll need to factor this into your budget when working out the cost of buying the home.
Construction
Several other factors about a home’s construction are considered by insurers when deciding whether to provide coverage. The security of the foundation, presence of asbestos and when it was built will likely be examined among other details.
It’s common for insurers to send out an assessor to examine your home in person and determine the risks faced.
Historic-registered homes
Insuring an older home can be particularly difficult if that home happens to be part of the National Register of Historic Places. If a historic-registered building is partially damaged, the cost of restoring that part of the property to match the original home can be very expensive.
Many of the materials used to construct historical homes are simply not readily available, and the job may even require the expertise of specialist trade workers, architects and other professionals.
Despite these difficulties, it’s still possible to find coverage for historic-registered homes — but it may cost extra. You’ll also usually need to supply a valuation which shows the true replacement cost of the property, and the insurer may include a clause requiring you to contribute to the cost of repairing the property if it’s under-insured.
Wood-burning stoves
From a home safety point of view, wood-burning stoves and open fireplaces fall well short when compared to modern heating solutions. As a result, many policies exclude damage caused by combustion heaters and open fireplaces.
With this in mind, you may want to consider another form of heating for your home.
Bottom line
Making updates to your older home doesn’t have to rob it of its charm, and in making them you can potentially make the building more insurable. Save yourself time and money by thoroughly comparing providers before signing a policy.