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- Full coverage homeowners policies are increasingly difficult to find at an affordable rate for older and more historic homes (Pre-WW2) due in part to their more costly repairs.
- More than four in 10 — 44 percent — of the nation’s housing stock was built before 1970.
- Additional policies, increased premiums, and riders can make up for coverage on custom or historic items; however, for full coverage on an entire historic home, you may need to find a provider through a trusted broker that specializes in insuring older and historic homes.
Why isn’t every other homeowner, yourself included, not taking full advantage of the ever-growing antique housing stock the U.S. has to offer?
One factor is likely because getting homeowners insurance for older homes can be difficult. It gets even harder when the home is over 100 years old.
So how do you go about finding home insurance for a risk-averse home that most providers see as uninsurable?
Shopping around, getting a historically accurate home appraisal, and raising your premiums are just a few of the ways that you can find affordable insurance for your older or historic home, all of which we discuss in more detail in the sections to come.
If you are thinking about purchasing an older home, be sure to educate yourself about the insurance process with our detailed guide below.
This guide includes stats on U.S.’s housing stock, rebuilding costs, insurance pitfalls, and the most probable solutions for finding the right insurance provider that will offer you full coverage at a price you can afford.
Our team is here to help you fill in some of the knowledge gaps regarding your homeowners policy for historic and older homes.
We understand the financial and emotional toll that policyholders undergo when it comes to a surprise lapse in coverage, and the information we gathered should go a long way toward helping you make a more informed decision before buying homeowners insurance for older homes rather than afterward when it comes to purchasing and insuring an older home.
Why are older homes harder to insure?
Many people love the quaint architectural details that come with older homes. Stained glass windows, wide hardwood floorboards, and other period touches lend a certain something you just can’t find in modern homes. Not to mention the high-quality building materials and craftsmanship that went into making these built to last, older homes.
Unfortunately, it’s the same details that make older homes so desirable that can also make it incredibly difficult to find an insurance policy.
Some insurance companies refuse to offer policies for homes that are older than 100 years and limit full coverage on homes built before the 1940s.
Insurance policies are designed to cover the amount that it would cost to rebuild the home from the ground up in the event of a total loss. In a lot of cases with recent homes, the cost of the necessary materials is close to the market value of the home. Sometimes, the replacement cost is significantly less than the market value.
When it comes to older homes with period details, though, the replacement cost is much higher.
The video below discusses the basics of replacement cost versus market value.
It ultimately boils down to the dollars and cents of repair costs; accidents are going to happen, and insurance providers do not want to be left on the hook with what they deem a riskier investment — your older home.
In the sections that follow, we will review statistics on the average age of America’s housing stock as well as how old is too old for insurance providers when it comes to your home.
The Hidden Costs of Repairs to Older Homes
So why is the cost of repairing older homes so much higher? Part of it has to do with the time and skill involved with recreating these details.
For instance, it’s a lot easier and cheaper to replace the windows on newer homes. Local supply stores carry the windows, and most contractors can easily install them. Intricate stained glass windows, on the other hand, are a lot harder to come by. The insurance company will have to find a special artisan to do the work.
According to Brian So, founder of Brian So Insurance, “Homes older than 25 years will need to have updates to these areas: roof, electrical, plumbing, and heating. The roof is the most important since most asphalt and wood shingle roofs have a lifespan of 25 years. Some roofs like concrete tiles can last up to 50 years so they don’t need to be replaced as frequently.”
The age of your home is key to finding out the potential cost of repairs which will, in turn, determine your home insurance options when it comes to finding the right provider.
Many homes that were constructed after 1945 but before 1900 may still find coverage under a traditional homeowners policy, with possibly a few add-ons and riders thrown into the mix.
The video below touches on the positives and negatives when it comes to buying older or newer homes.
As you can see from the video, there are still many pros to owning a 100-year-old home. However, homes built before 1900 pose a whole set of different problems, so it will be more difficult, if not impossible, to find full coverage with a standard homeowners policy.
Historic Home Renovations & Repairs
Most older homes built before the 1900s have some historical quirks but have been updated and successfully brought up to code. That means new electrical with the possible addition of a central HVAC unit. The more modern the updates, the cheaper the cost for potential repairs, thus the more likely a provider’s policy can afford the coverage when damaged.
According to Realtor.com, the National Register of Historic Places found in 1916 that renovations or restorations on historic or older homes generally cost 5.6 percent more in expenses than newer, similar-size homes in the same ZIP code. To give you an idea of the cost difference, the table below from HomeAdvisor shows estimates about how much you would pay to renovate a modern home.
Any homes built before 1900 run the risk of having period-specific features in the architecture that require unique building materials no longer in production; this poses an expensive problem when it comes to repairs.
Additionally, many materials in older homes simply aren’t made the same way. The wood used for hardwood floors, for example, is cut into thinner planks, and walls are plywood or sheetrock rather than lath and plaster. Smaller fixtures like light switches and door handles are also more expensive.
Pre-1900 homes are also more prone to damage due to out-of-date systems, such as an older electrical system that could lead to fire or a decrepit roof that leaks and results in water damage.
This video below touches on the hidden costs of an older or historic home when it comes to repairs and renovations.
The cost of a new roof on a modern home can run anywhere from $1-$4 per square foot to remove and replace the roof; this could run anywhere from $1,500-$8,000 for a 1,700-2,100 square foot ranch-style home.
On the other hand, replacing that same roof with historic building materials can cost as much as 50 percent more than the normal rate; for those not counting, that reaches about $12,000 on the high end not considering building material costs.
On the interior, you also have to consider drywall versus plaster, plaster being what is in most older homes. Drywall on an average-sized home can run around $4,800 while the plaster job will once again cost more, at about $6,000. Some owners of historic homes spend $300,000-$1.75 million on renovating a home between 4,000-7,000 square feet.
The main takeaway is that older homes cost more when it comes to repairs, both in materials and installation, and most standard homeowners policies do not take these additional expenses into account.
The best way to find out if you are fully covered under your homeowners policy is to talk to your agent, find out your maximum coverage for replacement cost, and contact an insurance appraisal company that specializes in historic structures. Only then will you be able to know if the worth of your home matches the amount of coverage offered through your policy.
Historic vs Old Homes (The Difference)
How old are we talking when it comes to the historic designation of a property? We are talking pre-World War II when discussing older homes, but as for running the risk or advantage of being designated historic, those are the homes that were built around the turn of the 20th century.
As you will see, designated historic homes or landmarks have their own set of disadvantages when it comes to finding an insurance provider willing to offer full-coverage policies.
Aside from unique features that require period-specific building materials, older buildings can end up being registered as historic landmarks and thus will be required to follow historic preservation guidelines when it comes to repairs.
That means these homes have to be rebuilt to certain specifications that match the original construction.
How old are most homes in the U.S.?
The aging housing stock in the U.S. is gradually narrowing aspiring homeowner’s options. Almost half of the nation’s housing stock was built before 1970. To give you a better idea of the median age of homes in the U.S., both older and historically designated, we have provided a table using data from the U.S. Census Bureau to show the number of homes based by the year they were built.
This older home trend is different depending on what region of the country you intend to buy your home, but on a whole, the U.S. is getting older by the day and so is our housing market.
With close to 40 percent of owner-occupied housing being built before 1969, that leaves a significant amount of homes in need of period-specific repairs using different materials. This presents challenges for cost models when considering a replacement for homeowners and for insurance providers when a covered loss occurs.
In the table below, you can see just how your state fares when it comes to the average age of housing stock.
The trend of older housing stock is most noticeable in the Northeast region of the country. New York’s homes are some of the oldest with an average age of 57 years; Massachusetts and Rhode Island are a close second at 54 and 53, respectively. Around 50 percent of D.C. homes were built more than 75 years ago.
Newer homes are popping up in the South, where three states carry a housing stock aged well below the national average of 37 years, but in time they will catch up as well. Younger owner-occupied homes are also found in Nevada (21 years), Georgia (25 years), and Arizona (25 years).
However, if you do not have the good fortune of living in the Southeastern region of the U.S., insuring an older home will become more and more of a problem for you as a homeowner.
Coverage Options For Older Homes
Due to the high cost of replacement, many insurance companies simply won’t offer coverage for this type of home. Those who do often require the homeowner to pay significantly higher premiums. For instance, a policy on a newer home usually costs around $500, but a policy for a home that’s 100 years old or more could easily come with a premium that’s $1,000-$3,000.
If you’re thinking about purchasing an older home, it’s a good idea to put some feelers out about the cost of insurance before you put in an offer. Farmers Insurance, Chubb, Fireman’s Fund, and a few other insurance companies specialize in this type of insurance.
However, a typical insurance policy may be suitable for an older farmhouse home or if historically accurate renovations aren’t a concern.
In general, it doesn’t hurt to shop around. A local independent insurance broker may be best suited to helping you find a policy that matches your unique needs.
Insurance When Your Home Has a Historic Designation
If your home has a historic designation can be a bit of a double-edged sword. On the one hand, although aged, many historic homes were built with solid materials meant to last. However, a historic designation also means you will have to replace those items with period-specific materials.
Underinsuring is probably the biggest mistake homeowners make when insuring an older home, especially when it’s their first home.
Providers base standard rates and coverage on replacement costs and materials from the modern age.
When you sign up for insurance, you may not realize the company would try to use cheaper materials to replace the walls, floors, or basic structure. You may not even realize the materials used to build your older home are out of the ordinary based on today’s standards. It’s only when the unthinkable happens that you realize you’re going to lose those small details you love about your home.
If you love the charm of your older home, it’s essential to talk to an insurance agent who specializes in insuring older homes. This person will be able to recognize the different materials used in your home and help you build a policy that will cover these differences.
Many insurance providers unfamiliar with historic designations will simply walk away from the table when it comes to providing insurance coverage.
The field of potential insurance providers for older homes is narrow due to the bureaucracy involved with historical societies and to arguments with homeowners seeking compensation for material costs insurance providers did not take into account.
However, those more costly repairs will tend to last longer. Say you repaired some of the floorboards that had been in place for over 100 years; replacing the wood with original material should give you a floor that will last another 100 years.
Also, these more expensive building materials should realistically increase the value of your home if you ever do decide to sell. An older home is best viewed as a long-term investment.
How the National Historic Preservation Act Affects Insurance
Historic preservation comes with rules and regulations on how and with what you can repair/rebuild your home, but it also comes with tax incentives.
The National Historic Preservation Act of 1966 set up two separate categories for listing potentially historic homes under either the National Register and/or the National Historic Landmarks program. Both programs are operated by the National Park Service who work tirelessly at identifying, evaluating, and protecting America’s historic homes.
We have talked at length about the prohibitive costs when purchasing and insuring a historic home, but what about the benefits?
The video below lists some of the benefits of purchasing a historic home.
Historic and older buildings preserve the history of our nation while placing an emphasis on community building and green building practices. The advocates in the video above make some strong cases for purchasing an older home, but we’d also like to remind you that these homes are long term investments.
These historic renovations take more time and more money than your traditional home. The payout in the end is probably worth it but only if you plan to stick around for close to eight or 10 years.
If Your Home Has National Register & Landmark Status
There are a couple of tax breaks and credits available for protected historic properties including the historic preservation easement tax break and the tax credit for rehabilitation work.
A historic preservation easement is essentially a legal agreement that protects the historic home and provides the homeowner with an income tax deduction.
The rehabilitation tax credit is offered through the Federal Historic Preservation Tax Incentives Program. A 20 percent credit is extended for any historic property operating as a business. This generally pertains to industrial, commercial, and rental housing.
Make sure to check neighborhoods. Some homes may not be classified as historic but reside in a neighborhood that is. Most repairs or improvements must be approved by the local historic society in these neighborhoods.
If this is the case, repairs must be made according to local stipulations on historic renovations. These repairs mainly account for visual perspectives on the outside, but some rules include instruction on the interior of the home, as well.
How can you save money on insurance for an older home?
Standard homeowners policies will generally only cover the full amount of an older or historic home if your premiums are drastically higher than usual. That means instead of the usual $500 a month, you may be shelling out $1,000 or more.
This is a determent for most homeowners, but if your heart is already set on purchasing an older or historic home, there are still a handful of ways you can reduce your monthly rates.
Is your older home up to code?
Before buying an older home, you will want to know if the building is currently up to code or will need significant repairs to bring it up to code. The price of an older home is sometimes much cheaper than a new home, but this won’t matter if you have to spend money on numerous updates to safeguard your home for modern living.
Most insurance providers will not back you as far as coverage for an older home that does not meet modern building codes. These repairs and renovations will need to be completed before a provider will insure the property.
These repairs can include updating older plumbing or even rewiring the entire building, so make sure you factor the additional costs into your budget when considering taking on what could very well be a real money pit.
According to Brian, the founder of Brian So Insurance, the main repairs for older homes will involve electrical and plumbing, and these are tasks that your underwriter should pick up on. “The underwriter scrutinizes an older home a lot more than a newer one. Having the updates ensures a smooth process when trying to get home insurance.”
So what exactly should you be on the lookout for when it comes to outdated plumbing or electrical?
Brian mentioned that “With the electrical, the underwriter wants to know if the home has at least 100 Amp circuit breakers and copper wiring. Other types of wiring, representing a higher fire hazard. The plumbing should be copper and/or ABS plastic plumbing. Other materials like polybutylene, lead, and galvanized steel do not have as long a lifespan and can cause leakage over time.”
The other thing homeowners may not realize is that an insurance company may cancel a policy after it learns there is something dangerous about the home — unless that homeowner is willing to make changes.
Outdated electrical systems, for instance, are a big problem. These older systems were not built to carry the type of usage that most modern families are accustomed to. It creates a fire hazard that, if fixed, should significantly reduce your monthly rates.
If you just love your older home, you’re not necessarily doomed to paying higher premiums. Try asking your insurance agent if there is anything you can do to reduce the cost of your home insurance.
For instance, by making updates to the home that reduces the risk of damage, the company might lower your premiums. You could pay an electrician to modernize the wiring, have a plumber replace older plumbing systems, and get a new roof. All of these things modernize the home and keep it protected.
Deductible and Rider Options for Older Homes
Another option might be to increase the deductible. In a traditional policy, your deductible might only be $500 or $1,000. Increasing your deductible to $10,000, though, will decrease your premium. Not all insurance policies offer this option, and you’ll be on the hook for fixing small problems, but you’ll be covered if you lose your home.
One of the biggest issues for homeowners and insurance providers with historic homes is replacing unique features with original materials.
Older homes will have less manufactured features having used materials that were initially made to last. These materials, such as a solid wood door rather than a hollow one, would be more costly to replace.
Also, if your home has any unique historic features like hand-blown stained glass, your rates may be able to be lowered if you take out a separate policy for individual items that would be most costly. In these cases, you want to look into taking out a separate rider on your policy to cover for these unique features
Tips for Avoiding Insurance Mistakes With Historic & Older Homes
The key to insuring any type of home is to find a policy that is the right match for the home. Those who have older homes have more challenges than those who have newer ones, but it isn’t impossible.
Old home aficionados simply have to find a way to balance their love for historic looks with the amount that they’re willing to pay for a homeowners’ policy. Fortunately, insurance agents are there to help consumers work out these difficulties.
Turn to a Broker you can trust. Since 2003, the National Trust Insurance Services, LLC (NTIS) has helped individuals with securing the proper amounts of insurance coverage for older and historic homes.
Many policies for older homes have serious gaps that will leave the policyholder footing the remainder of the bill. This is a frustrating situation especially considering most homeowners assume everything would be covered.
NTIS works to alleviate this frustration and ensures upfront that you will have the necessary coverage if damage occurs to your historic or simply older home.
Find out the actual cost of your home through an appraisal agency that specializes in Historic Appraisal Services, LLC. Once you have determined the actual replacement cost of your home, you can safely move ahead determining the best route for a full home coverage policy for your historic home.
The most important part of being a responsible homeowner, aside from the obvious on-time payment of your mortgage, is protecting your home and your family; the best way to do that is by staying informed.
Your provider’s responsibility is to cover the costs of damage or loss as stipulated in your policy, not to inform you of potential lapses in your home coverage. Trust us when we tell you there’s no wiggle room for negotiating payment on an uncovered claim, especially if your only defense is “I didn’t know.”
Would you consider living in a 100-year-old home?
Either way, we hope you never find yourself having to use the I-didn’t-know excuse when it comes to home insurance. At the least, you should be covered when it comes to troubleshooting insurance for older and historic homes.
If you’d like to take that informed opinion one step further, check out our free online quote option below. Find out more about what it would cost you to insure an old or historic home with a detailed quote. Just type in your ZIP code and we will guide you through the process. It’s that easy.