Do You Need Special Homeowners Insurance For Older Homes?

Older homes possess a certain allure that cookie-cutter new construction frequently lacks, from stained-glass windows to dumbwaiters and wood-burning fireplaces. Additionally, older homes are cheaper in many places. However, older homes may be more difficult to insure and more costly to repair or rebuild. Depending on the age and condition of your property, you may need to purchase specialized home insurance for older homes or supplement your policy with particular insurance riders or endorsements.

Why is it more expensive to insure older homes?

The replacement cost of an older home is higher than the cost of a modern home — even if their market values are comparable. Older homes typically include more adaptations and unique features than newer structures. They can be constructed using ancient or obsolete building materials (such as plaster walls) that are more expensive to repair or replace if damaged.

Additionally, insurers perceive older homes as higher risk than modern homes, as they are more likely to be in disrepair and hence more likely to sustain structural damage.

For example, suppose you're considering purchasing a historic Victorian home. In that case, you should include the expense of upgrading electrical systems, plumbing systems, walls, and roofs with more contemporary materials that comply with building requirements. Additionally to that expensive load, you may have difficulty obtaining homeowners insurance if the home is not kept up to your insurer's maintenance requirements.

Consider the following coverages for older or historic homes:

Standard home insurance policies may not be sufficient to properly protect an older home, particularly if it is historic or of high value. The following are some coverage alternatives that can often be added as an endorsement to your house insurance policy, allowing you to supplement your coverage.

Coverage For Replacement Costs

While HO-8 plans are designed for older homes, the main disadvantage of this policy type is that it pays out based on actual cash value less depreciation. While opting for replacement cost coverage is a good start, homeowners can take it further by purchasing guaranteed or extended replacement cost coverage. Guaranteed replacement cost coverage increases your coverage limits to ensure that your home is rebuilt even if the rebuild cost exceeds your limit — as is frequently the case with historic homes when labor and materials are taken in.

Coverage of Water Backup and Service Lines

Another critical — but frequently overlooked — factor to consider has less to do with the construction of your home and more to do with what's beneath it. These in-ground protections for water backup and service lines may be especially beneficial for residents of older homes, which frequently have deteriorating pipes and utility lines. Repairing these can become exorbitantly expensive, as the homeowner is responsible for maintaining these lines.

Which homeowner's insurance policies include coverage for older homes?

An HO-8 insurance policy is designed to cover older homes that are difficult to replace. These are residences whose replacement value surpasses their market worth in most cases. This is a modified version of the HO-3 homeowners' policy designed for customers who own homes older than 40 years. This policy protects the structure of your home and your responsibility and property.

However, HO-8 plans do not function on a replacement cost basis; if a unique architectural feature of your home is damaged, your insurance provider will payout based on real cash value, adjusting for depreciation and leaving you responsible for the remaining damage.

To ensure that your historic property is completely rebuilt in a tragedy, you may want to investigate high-value homeowners insurance. Insurance firms that specialize in high-value properties may also better understand older, historic residences.