5 Things You Should Know About Insuring an Old House

two people discussing how to insure the house

The Right Homeowners Insurance Can Help Cover the Costs of an Old House Renovation

Charming details, expertly crafted design elements, and a few quirks are what make your older home what it is. However, it’s these very features that can make your property more difficult to insure.

Insurance companies view older homes as more of a risk compared to newer houses. They often don’t satisfy the latest building codes and are filled with unique characteristics that aren’t easy to replace. Because of this, it can be a challenge to find a policy that will cover the costs of damages and subsequent old house renovations.

Whether you already own a historic home or are considering buying one, having the right coverage to protect your property and all the treasured belongings that fill it is of the utmost importance. Here are five things you should know about insuring an old house.

Older Homes Are Typically More Expensive to Insure

The price you pay for homeowners insurance for an old house is almost always more than what it would be for a new build. According to The Washington Post, insurance premiums are roughly 20% higher for historic homes.

Why? Your homeowners insurance premium is based on your property’s replacement cost value, or what it would cost to completely rebuild your home as it stands now. In the eyes of insurance companies, the hard-to-replicate materials that distinguish your home create unnecessary risk and drive up the replacement cost value. As a result, insurers aren’t as eager to extend coverage, which ultimately increases policy prices.

The good news is that there are several actions you can take to help lower the costs of insuring your historic home. One of the best solutions? Investing in old house renovations. By upgrading electrical wiring, plumbing, building features, and more, you can better protect your property from potential harm and greatly reduce your insurance premium.

Consider an HO-8 Insurance Policy

An HO-3 insurance policy is standard for most homeowners, but if you have a particularly old home, you might not qualify. In these cases, an HO-8 policy is in your best interest. This type of homeowners insurance is specifically designed for historic properties with a replacement cost that exceeds its current market value. Or in other words, a total old house renovation or rebuild would cost significantly more than what the home would sell for.

Even if you own an older home in flawless condition and are eligible for an HO-3 plan, don’t completely rule an HO-8 out. Insuring your house this way can be more affordable.

An HO-8 is like an HO-3 in that it includes personal property and liability coverage, but your home is typically protected against fewer perils, like water damage. However, there are several additional coverage options you can take advantage of to fill any gaps in your HO-8 policy.

Certain Coverage Add-Ons Can Help With an Old House Renovation

Both extended replacement cost and guaranteed replacement cost are excellent coverage add-ons to keep you from paying high out-of-pocket costs related to rebuilding or renovating your old house after it’s sustained damage.

  • Extended replacement cost increases your dwelling coverage by a predetermined percentage – usually 25 to 50% – if repair costs exceed your normal policy limit.
  • Guaranteed replacement cost covers the full amount of your old house renovation when you submit a claim. If your home is completely destroyed, this add-on will make your insurance company wholly responsible for any rebuild costs.

In addition to these options, you may want to consider coverages that protect you during the reconstruction process – regardless of if you’ve experienced any property damage. There are a lot of unknowns when it comes to renovating an old house, but fortunately, these add-ons offer more peace of mind:

  • Home under construction insurance provides protection for “fire, storm damage, burst pipes, theft, and other covered perils – plus soft costs associated with construction delays, building materials, and premises liability,” according to PolicyGenius.
  • If you won’t be living in your home while it’s being worked on, you may benefit from vacant and unoccupied home insurance. This helps cover the costs of property damage and accidents that may occur while you’re temporarily away.

No matter the scope of your old house remodel, it’s best to talk to your insurance provider before the work begins. An agent will be able to identify your insurance needs, make coverage recommendations, and find the right policies for you.

Determine If You Need to Update Your Coverage After Your Old House Renovation

Don’t assume that your same homeowners insurance coverage is sufficient after an old house remodel. Any improvements may increase your home’s valuation, as determined by your insurer. This means you might need to update your coverage to better suit your home’s new overall value. If you don’t have an insurance plan that matches your current valuation, you risk running into a situation where you won’t be covered and are forced to raid your savings.

Whether an old house kitchen remodel or a whole-home overhaul, be sure to contact your carrier any time you’ve had your property worked on, so you can get an up-to-date valuation and address any new insurance needs.

Partnering with a Qualified Old House Renovation Team Ensures a Smoother Claims Process

In the unfortunate event that your historic home is damaged and you have to file a claim, you need a remodeler you can count on for old house renovations. When vetting your options, make sure to land on a business that’s licensed and insured, otherwise you may be liable for any mistakes they make on your property.

A reputable remodeling company also guarantees the quality of their work. The last thing you want to do is backtrack and find another team to remedy what was initially done. This is not only expensive but can impact the integrity of your home as well.

Especially with an old house remodel, it’s essential to hire a team with the knowledge and skills to restore your home to its former glory. A remodeler that understands classic architectural style and period-appropriate design will ensure your property’s special history remains intact.

Reach out to your local old house renovation expert to learn more about how insurance can impact your remodeling plans.