Jan 12, 2021
Things To Consider When Insuring An Older Home
Need coverage for an older home? Buying older developments has become popular where people purchase older houses in good locations intending to perform a renovation.
Purchasing an old house is a unique experience. They tend to come with more risk, and often require building updates to ensure you can get home insurance.
Whether you've fallen in love with an old Victorian, mid-century ranch, or colonial, you need to understand the costs of insuring older homes fully; we've put together what you need to know to protect your century-old investment properly.
What Is A Heritage Property?
A heritage or century property must be formally recognized by an authoritative source within the province. They can have legal protection, so updates may not be easy to complete by homeowners unless they receive the proper approval and permit.
Owning a heritage property is an investment in Canadian history. Here are some factors that can determine if a property is historic or not :
- Architectural design (interior or exterior) or builder
- Construction methods
- Historical events
- Who lived there
- Cultural value
You can find out if your property meets the criteria by contacting the municipal and provincial government for types of designations and stewardship.
Is Insurance More Expensive For Older Homes?
In general, they are more expensive to insure due to the repair and maintenance required. Many were not built to meet today's building and safety standards.
The process of buying an older home and understanding the requirements can be very different – largely because of the risk involved with buying an older house.
Insurers are happy to insure newer builds that are well constructed, well maintained and have been recently built. Heritage can be more difficult because of the potential risks with dated wiring, roofs, plumbing and heating systems.
Pros And Cons Of Buying A Heritage Home
If you are considering it, here are some of the pros and cons of investing in an older home :
- Location : Many are in ideal locations in established neighbourhoods.
- Price : They may have a lower selling price because of the condition.
- Character : They have character with original and unique building features such as flooring, mantles, doors and trim.
- Lot Size : Many older houses have larger lots compared to new builds.
- Potential : There is potential to increase the value once renovated.
- Repair Costs : Replacement of windows, roof, wiring and other areas that do not meet current building code.
- Hidden Issues : Additional repair costs discovered during a renovation such as mould, rot, termites, and structural issues.
- Energy Efficiency : Many unrenovated buildings are not energy efficient which can lead to higher bills.
- Outdated : Outdated design elements such as wallpaper, lighting, plumbing fixtures and flooring that may need to be fixed.
What To Consider When Buying A Century Home
There is a lot to consider when buying an old house. While you are likely thinking about renovations and interior design, what your policy can cover should be at the top of your list.
If your home is over 30 years old, you may be required to upgrade plumbing, electrical or heating before the protection can be active. Here are some of the most common areas that could require updates before getting approval :
If your asphalt roof is more than 25 years old or other roofing materials have exceeded their suggested life expectancy, you may be required to replace it.
Plumbing upgrades from galvanized pipes to copper or plastic pipes may be required.
Steel pipes that were installed before 1950 last for 40-50 years. After that, they begin to rust or corrode from the inside out. This can result in lower water pressure and higher chances of leaks or ruptures.
The heating system may need to be replaced or upgraded to secure coverage. Radiant heat panels, space heaters, and furnaces older than 25 years may not be deemed acceptable heat sources.
If the oil tank is more than 25 years old, you may be required to replace it. You may also be required to have it inspected and certified by a Technical Standards and Safety Authority (TSSA) inspector.
"Tanks 25 years or older are highly susceptible to rusting, deterioration and leakage and are considered environmental hazards," says FSCO.
Sewage Line Replacement
Sewer lines and septic tanks may be required to be upgraded or inspected. You may also be required to add additional protection from water damage insurance.
Places built before 1980 may not have wiring or amperage that meets new building standards. You may be required to upgrade from 60-amp service to 100-amp service (the minimum building code standard today). This is because insurers are concerned about the threat of overuse and overheating. This leads to a higher chance of electrical fire.
Knob And Tube Wiring
If it has knob and tube wiring or aluminum wiring, you may be required to upgrade to copper wiring. Commonly found in homes over 50 years old, knob and tube wiring can pose greater risks than the copper wiring used today.
Wood Burning Stove
If not installed or used properly, wood burning stoves can be a fire hazard. You may be required to have your wood burning stove inspected by a certified Wood Energy Technical Training (WETT) technician first.
Mortgage lenders require proof before accepting your application for a mortgage. For a prospective buyer planning to purchase an older home, this means you will have to address any issues preventing you from getting any. Renovations will be required to be completed by the seller or new owner to get it, so you can also qualify for a mortgage.