Buying an Older Home

If your home is over 30 years old, your insurance company may require you to upgrade the plumbing, electrical and/or heating systems in your home prior to providing you with or renewing your homeowners insurance policy.

If you are looking to purchase an older home that has galvanized steel plumbing, 60-amp electrical service, knob and tube electrical wiring, a wood-burning stove or a fuel oil tank, make sure to factor the cost of necessary upgrades into your offering price! Your insurance representative will be able to advise you on what upgrades may need to be completed prior to obtaining homeowners insurance coverage.

Here are five things that make insurance companies nervous:

 

1. 60amp electrical service
    
   If your electrical service is 60amp or below, your insurance company may require you to upgrade to 100amp to obtain coverage. However, they may accept a switching device such as a Load Miser that allows for the operation of only one major appliance at a time.
   
   
2. Knob and tube wiring
    

   Many older buildings built in the 1920's or earlier were constructed with knob and tube wiring. This means that the building has no ground wire, and that the existing wire can be fragile because of its age - creating a potential safety hazard. An inspection by a certified electrician may be required to obtain insurance coverage. There is no requirement to replace knob and tube wiring except when renovating. Also, a knob tube circuit must not be extended.
   
   
3. Wood burning stoves
    

   Modern wood burning stoves have been tested and approved by CSA, UL or a similar testing agency. An approval symbol and the acceptable clearances between the stove and any combustible surface are clearly marked on the back of the stove. If you cannot find the approval symbol, then your stove is likely not approved. In such a case, the insurance company may require that you remove it.
   Even if your stove is approved, you may have to have the installation approved by a Wood Energy Technical Training (WETT) technician to satisfy the insurance company. If you plan to install a wood burning stove in your home, check with your insurer in advance to find out their requirements.

   
   
4. Fuel oil tanks
    

   Older fuel oil tanks are susceptible to leakage. If a fuel oil tank does leak, the clean up costs will be considerable (one case I heard of a cost of $60,000). Therefore, most insurance companies will only insure a fuel oil tank if it is less than 25 years old. If your tank is older than that, typically your insurer will require that it be replaced before you can obtain coverage. Also if you have an oil tank check your insurance policy to make sure you are covered.

   
   
5. Galvanized steel pipes
    Houses built before 1950 often have galvanized steel plumbing for both supply and waste. These steel pipes rust from the inside out, resulting in reduced water pressure, slow drains and eventual leakage. As the risk of leakage is high, the pipes should be replaced as soon as possible.