3 Reasons Why Older Homes Are Difficult To Insure

Home Insurance

Sometimes getting a home insurance policy can be difficult and this can be for a number of reasons. Older homes are typically ones built before the 1960s and may have outdated utilities which haven’t been updated for several decades. As construction standards have improved, homeowners and insurance companies have discovered that these older utilities pose a serious risk to the home! In this article, we review 3 major outdated utility types, why they increase your risk of having a loss at your home, and what you can do!

1. Outdated Electrical Systems (i.e. Knob and Tube Wiring or 60-amp Electrical Systems)

Older homes may still be using knob and tube wiring throughout the house for its electrical system. Also, older homes may still be using 60-amp electrical systems, if it is not knob and tube wiring. With these electrical systems, there is more of a risk of an electrical fire because they are easier to overheat. Thus, these electrical systems make it harder for insurance companies to offer home insurance policies because they pose more of a risk than modern electrical systems used in newer homes. In terms of knob and tube wiring, electricity can erode the outer casing, cause sparks, which can then lead to a fire. As a result, the policies offered by insurance companies will most likely be more expensive. In addition, insurance companies will need an ESA certificate for the house, if it does have this type of wiring installed.

2. Oil Furnace, Wood Stove, or Pellet Stove

An oil furnace, a wood stove, or a pellet stove are typically found in houses that have been built at least 40 or more years ago. These type of heat sources make a house harder to insure because they pose as larger risks for fires than modern heating sources such as a gas or an electric furnace. Not only do oil furnaces, wood stoves, and/or pellet stoves make a home harder to insure, but they often increase the cost of the home insurance policy.

3. Plumbing

Older houses were typically installed with lead and/or galvanized steel pipes for their plumbing systems. The problem with lead pipes and/or galvanized steel pipes is that they are easier to corrode and rust, which can lead to pipe leaks, clogs, and major pipe bursts. Water damage is the most common cause for an insurance claim and updated plumbing systems are essential to keeping your home safe against this issue. Therefore, outdated plumbing systems are bigger risks and liabilities to have built into the house and they make a house more difficult to insure.

It is extremely important to maintain and update these utilities if your home was built more than 40 years ago. This is something you may want to consider, especially if you are thinking of buying an older home in the future. If you do choose to start a renovation project to update your home’s utilities, remember to notify your insurance broker to maintain your home insurance coverage throughout the project. If you would like more information on this topic or just on home insurance in general, you can contact one of our brokers today.

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By Laura Parkes