If you’re planning on buying an older home, you should also be aware of the impact it has on your insurance. The process of buying a home is long and important. You must first find a property that suits your needs. Then you need to bid on it. Finally, if they accept, you have a slew of legal forms and fees to pay to make it all official. One of those things includes buying home insurance. When you are buying an older home, your insurance rate will likely be higher than a new home. We’ll detail the things you should note when buying an older home as it relates to your insurance.
What risks come with buying an older home?
For starters, homes built before the 1960s can have all kinds of issues that would not be up to code today. These issues can cause problems as a homeowner, and make you more likely to make a claim. As such, insurance on older homes is generally higher. There are also certain issues that need immediate attention. They include:
Knob and Tube Wiring – This style of wiring does not come with a ground wire which is a major risk. They also are in danger of wearing down and are susceptible to short circuits.
60-Amp Service – Current homes come standard with 100-amp service. Our world is reliant on plugging things in, thus the risk of overheating is higher. You can also more easily overload an outlet, which increases the chance of an electrical fire.
Old Fuel Tanks – If your home has a fuel tank older than 25 years, it can be a major risk. They are prone to rust damage, leakage and could be an environmental issue. If your tank leaks, the cost to do a cleanup could be as much as $20,000.
Wood Burning Stoves – Older homes often have wood burning stoves. While they are becoming popular again, they can be a serious fire risk. Wood burning stoves that haven’t been properly maintained are a concern.
Galvanized Steel Plumbing– These pipes have a lifespan of 50 years max. Generally, most homes with this style plumbing need replacing. Failing to do so puts you at risk for floods, as they are likely rusting and corroding from the inside.
What impact do these issues have on my insurance?
The impact of buying an older home on your insurance is going to be higher rates. If you want to get cheaper home insurance, you will need to address some, if not all, of these issues. Here’s how each of those issues affects your home insurance.
Knob and Tube Wiring – In some cases, insurers may decline coverage outright if you have this style of wiring. Your rates will be higher, and your options will be fewer.
60-Amp Service – The threat of electrical fire is higher with 60-Amp, as such your rates will be higher. Generally, insurers will ask that you replace exposed wiring before they will ensure you.
Old Fuel Tanks – If an oil tank is older than 25 years, you will not likely be able to get home insurance. Instead, you will need to have a newer tank that a TSSA inspector has certified before you’ll get coverage.
Wood Burning Stove – You will be able to get home insurance usually if the home has one of these. That said, they will need it inspected to certify that it’s safe. A technician certified by the ULC and Canadian Standard Association (CSA) is necessary.
Galvanized Steel Pipe – The risk of flood is far too high for most insurers. As such, you may have difficulty in finding affordable insurance.
An old home may come at a lower price, until you consider the costs that may come with it. Higher home insurance rates are likely unless you plan on doing major home upgrades. In some cases, upgrades will be necessary before you can even get coverage. As such, you should keep it in mind when you make your next home offer!
Our insurance brokers are here to help you find the best insurance coverage for your home. Feel free to call us at 1- 877-514-7873 to speak to one of insurer’s issuance brokers.