Insurance Coverage for Older Homes
If you purchase a home over 30 years old, and contact your insurance broker for a quotation for homeowner’s insurance coverage, you will find that he/she will ask you to provide details about the home’s plumbing, wiring, heating, and roof.
Electrical Service
If you are advised that the home has 60-amp electrical service and/or knob and tube wiring, you may find it is difficult for your insurance broker to source economical premium quotes.
In the case of 60-amp electrical service, insurers are concerned that the service may not be adequate to meet the strain imposed by today’s electrical appliances - washing machines, dryers, stereo systems, computers, air conditioners, etc. Canadian Electrical Code permits 60-amp electrical service in new construction where the floor area, excluding basement, is less than 80m squared (861.20 ft squared). But since most exceed that figure, 60-amp electrical service poses the threat of over-use, over-heating, and a possible fire. As an affordable alternative to upgrading the electrical service to 100-amps, the option exists of installing a switching device, which allows only one major appliance to operate at a time. In that event, the risks of over-use and over-heating is reduced.
Unfortunately, obtaining insurance coverage for a home with knob and tube wiring poses a much greater challenge. This type of wiring is typical of homes built prior to 1940, and is comprised of wiring strung through a system of two-piece porcelain knob-shaped clamps and hollow tubes. Modern electrical codes don’t permit this of wiring since the wires are now aged and susceptible to wearing and exposure. Ontario Hydro inspections usually require that all exposed knob and tube wiring is replaced with approved permanent wiring material. If you are purchasing a re-sale home, it might be wise to incorporate an inspection into the purchase agreement as a condition of sale. The result may be a much lower insurance cost.
Oil Tanks
Another key factor in maintaining insurability at a reasonable cost is the type and age of the heating system within the home. Oil tanks are becoming increasing unpopular due to the environmental hazards they pose. A pinhole leak can spill 750 litres of oil in eight hours and have cleanup costs ranging from $5,000 to $150,000. Depending on the extent of damage, a home's entire foundation may need to be replaced.
If the home you wish to buy has an oil tank, consider the following things:
1. Where is the tank kept? Most insurers will only offer coverage if the tank is located within the house. Tanks located outside or underground are not typically accepted.
2. Is it accessible? Tanks encased in walls or vaults are very difficult to service or replace. If you cannot see the entire tank, you are not as easily able to monitor its condition, thus rust and deterioration may go unnoticed.
3. How old is the tank? Tanks 20 years or older are considered an increased hazard for leakage. A new tank costs anywhere from $700 to $1,500 to replace.
Woodstoves
Woodstoves are also considered undesirable by most insurance companies as they increase the hazard for fire. However, unlike old oil tanks, homes with woodstoves are insurable as long as they are installed to code and proper clearances are observed. If the woodstove is acceptable to the insurance company, an auxiliary heating surcharge (usually about $50) is added to your premium. If the woodstove is not installed properly, or has inadequate clearances, you will be required to have the unit brought up to code, which could prove to be a costly exercise, or to have the unit removed before insurance coverage will be offered.
Roof
A home’s roof is one of the most important things a potential homeowner should consider. Damaged or worn shingles give way to endless opportunities for damage and deterioration of the home. A leaking roof can cause rotten walls and ceilings, mould, spores, and poor circulation within the house. Leaking or damaged shingles also prevent heat retention in the winter and allow for excess humidity in the summer. Signs of roof leakage can include:
Yellowish markings or rings on ceiling tiles,
Bubbled or cracked walls and/or stucco ceiling coverings, and
Mildew or "stale" odour.
Although the average shingled roof has a life of approximately 20-25 years, weather and environment may warrant replacement prior to this. Insurance is not designed to cover wear and deterioration of maintainable items such as roof shingles. As a result, the costly damage caused by a leaking roof is not covered by insurance.
Plumbing
One of the most forgettable things a potential homebuyer should worry about is the plumbing within the home. Even though you do not see a whole lot of the plumbing throughout your house, it is no less important than the roof or furnace. Depending on the age of your home there could be a number of concerns that exist with the plumbing system:
- Galvanized Steel Piping – this was used into the mid 1960’s and is characterized by the 1" diameter pipes which utilize threaded connections. Problems include corrosion and mineral deposit build-ups in the connections which could lead to ruptures or leaking.
- Lead Piping – this was used up until the 1950’s. Most common issues are health related.
- Cast Iron – this was used until the 1950’s as a drain or waste pipe, and was not designed to hold water. Pipes are susceptible to corrosion on the inside, which causes the escape of gases and odours, and leaks.
The recommended type of plumbing within the home is copper and plastic (A.B.S./P.V.C.). Copper has been used in most houses built since the 1960’s. Pipe diameters vary from ½ " to ¾ " and have soldered joints. P.V.C. are used in some more modern applications. Joints can be threaded or glued.
Purchasing a home is one of the biggest investments a person can make. Protecting that investment is one of the biggest responsibilities a person will have. Regular inspections of heating, electrical and plumbing systems are always recommended, no matter how new they are. Preventative maintenance will save homeowners thousands of dollars in the long run by eliminating potential problems before they cause costly damage or injury. If you are considering a home that has one or more of these conditions present, make sure the asking price of the house is reasonable considering the upgrades that will need to take place prior to, or immediately upon applying for insurance coverage. If you decide to proceed with the house, notify your insurance broker immediately so that he or she may advise and counsel you on what you will need to do and in what time frame you will be given.
** The information provided herein in intended to provide general information and not to replace the professional advice of your insurance broker. Should you have questions pertaining to your specific needs, please contact our office