Flipping that house? Insurance need-to-knows for older or historic homes
If you own or are planning on purchasing an older home, you probably are already well aware of the potential construction and maintenance pitfalls. One lesser-known concern comes with insuring these properties.
Older Homes Have Fragile and Finicky Components
From old and ineffective wiring to structural weaknesses, older homes can be a source of headaches when repairs are necessary. In a new home, systems generally work fairly well and when they don’t — such as a circuit breaker that continuously trips — a skilled contractor can usually pinpoint and remedy the issue.
Not all older homes are brittle due to age. Years ago, brick, mortar, and hardwoods were used as building materials. These can make a house much more sturdy but are expensive and sometimes impossible to replace. Your insurance choices should reflect this cost.
Ask for Guaranteed Replacement Cost Coverage
Often, people solely rely on price when shopping for insurance. With a historic home, you need to factor in coverage. Ask your insurance broker or agent for guaranteed replacement cost. If a tree falls on your 1850s roof, you do not want it replaced with 2018 shingles.
Restoration is different than replacing, which in insurance terms can mean just giving you money for per square foot based on the cost to build a similarly-sized structure today. Older home restoration is much more expensive. This insurance is, accordingly, quite costly but there are ways to save.
Try to Add Interior Items to Riders
One trick to save on insurance costs is to add interior components of your historic home to a fine arts floater or rider. Paintings, sculptures, rugs, folk art and antiques — which would usually be covered under a property insurance policy — can be excepted from coverage and moved to an inexpensive art rider.
Insurance is supposed to make a homeowner whole again after a loss. Unfortunately, some historic homes cannot be replaced after damage, but with the right coverage, restoration can be the next best result.