Insuring Your Home: What You Need To Know

Whether or not your house is insurable depends on a variety of factors. Firstly, insurance companies will assess the location of your home, including its proximity to emergency services and areas at risk of natural disasters. They will also consider the construction of your home, including the materials used and any unique features. Your home's maintenance history and any previous insurance claims will also be taken into account. Additionally, your personal history, such as criminal convictions and credit score, can impact your eligibility for homeowners insurance. It is important to note that insurance companies have different criteria for determining insurability, and you may need to consult multiple providers to find coverage that suits your needs.

Houses with outdated wiring, plumbing or old construction may be uninsurable

If you own an older home, you may be concerned about whether it is insurable. Many older homes have outdated wiring, plumbing, or construction that no longer meets modern building codes, which can make them difficult or costly to insure. Here are some things to consider:

Outdated Wiring

Older homes, particularly those built before 1940, may have knob-and-tube wiring, which is unsafe and cannot handle modern power loads. This type of wiring lacks a ground wire, a safety feature that protects appliances and devices from surges. While not all knob-and-tube systems need to be replaced, it is essential to consult a licensed electrician for a full inspection. They may recommend adding ground-fault circuit interrupters (GFCI outlets) to improve safety.

Another concern is aluminum wiring, which was commonly used in the 1960s and 1970s due to a copper shortage. While aluminum wiring is an effective conductor of electricity, it is more susceptible to corrosion and loosening at connection points, creating a fire hazard. Special nuts can be added to connection points to prevent corrosion, or electricians can replace corroded wires.

Ungrounded wiring is another issue in older homes. If your home has two-prong outlets instead of three-prong ones, it means your wiring is ungrounded. This can be a safety hazard, as a grounded home directs excess electricity into the ground, protecting the electrical system. Licensed electricians can ground your house and install new three-prong outlets.

Additionally, older homes may have asbestos insulation and cloth covering on wires, which can be health hazards. Asbestos should be removed, and cloth-covered wires should be replaced as they become brittle over time and may be chewed through by rodents.

Outdated Plumbing

Plumbing issues are also common in older homes. Homes built before the 1990s may have pipes made from materials no longer approved by US building codes, such as lead, galvanized pipes, and polybutylene pipes. Lead pipes are highly toxic and can cause various health issues. Galvanized pipes are prone to corrosion and breakage, while polybutylene pipes can flake, become brittle, and crack due to a chemical reaction with oxidants in public water systems. It is recommended to have a professional plumber inspect your plumbing to identify any outdated pipes that need replacing.

Older homes may also have pipe bellies, where pipes installed underneath the house shift downward, creating negative slopes that restrict water flow and cause pools of waste and sediment. Left unattended, pipe bellies can lead to stoppages or leaks. Trenchless pipe bursting repair may be a solution, but a professional plumber should assess the severity of the issue.

Old Construction and Structural Issues

Older homes may also have outdated construction materials, such as asbestos, lead paint, and polychlorinated biphenyls (PCBs), which can pose health hazards. The EPA recommends testing for radon gas, PCBs, lead, and asbestos to determine if a property is a health hazard.

Additionally, older homes are more likely to have structural issues, such as foundation, roofing, or wall problems. A structural engineer should inspect the home to ensure it is sound and identify any significant issues.

In conclusion, while older homes may have their charms, they can present challenges when it comes to insurance due to outdated wiring, plumbing, or construction. It is essential to consult with professionals, such as licensed electricians and plumbers, to identify and address any issues that may impact the insurability of your home.

Houses with safety issues or problems on the grounds may be uninsurable

Houses with safety issues or problems on the grounds may be deemed uninsurable by insurance companies. This is because such properties present a high risk of liability claims, which insurers are reluctant to take on.

Safety issues that can lead to a house being deemed uninsurable include:

• Poor or non-standard construction, such as weak foundations or sub-standard building work, which can result in structural issues that impact the safety and security of the property.
• Maintenance issues, such as a sagging roof, broken windows, peeling plaster, or dead trees, which indicate a lack of proper upkeep and can compromise the structural integrity of the house.
• Remodeling work that does not comply with building codes or that affects the plumbing or electrical wiring in the home.
• A history of multiple insurance claims, which indicates frequent problems and a higher chance of future claims.
• The presence of a swimming pool without proper safety measures, such as a fence, which increases the risk of accidents and liability claims.
• Location in a high-crime area, where vandalism, theft, or other crimes are common, increasing the risk of claims.
• Proximity to vegetation or wildland areas, which can increase the risk of wildfires.
• Damp basements or water damage to the foundation, which can affect the structural integrity of the house.
• Defective plumbing or electrical systems, which can lead to leaks, electrical fires, or other hazards.
• Foundation issues such as cracked walls, bulging, or structural damage, which indicate a lack of stability and can pose safety risks.
• Leaking or damaged roofs, which can lead to water damage or create an entry point for pests.

It is important for homeowners to address these safety issues and make the necessary repairs or improvements to increase the insurability of their property.

Houses under construction or renovation may be uninsurable

Houses under construction or undergoing extensive renovations may be uninsurable under a standard policy. In such cases, a special type of insurance policy is required to cover the additional risks associated with construction. This is known as "course of construction" insurance or builder's risk insurance.

Once the construction or renovation is complete, the homeowner can switch to a regular home insurance policy, provided the home has been inspected and meets the insurance company's standards.

• Dangerous location: Properties in high-risk areas, such as those with high crime rates or prone to natural disasters, may be ineligible for homeowners insurance.
• Dangerous home features: Certain features, such as wood-burning stoves, wooden roofs without fire-retardant coating, swimming pools, trampolines, and treehouses, can increase the risk of injuries and liability claims.
• Home maintenance issues: Issues like fragmented foundations, outdated electrical systems, insufficient plumbing, or broken chimneys can make a home uninsurable.
• Aging mobile homes: Mobile or modular homes may be excluded from coverage by certain insurance companies due to their age and intended lifespan.
• Claims background: A history of frequent insurance claims or underlying structural issues identified in previous claims may lead to a home being deemed uninsurable.
• Poor building quality: Subpar construction or inadequate foundations can make a home hazardous to occupy and more likely to result in frequent claims.
• Substandard remodeling: Improper renovations can affect the electrical wiring or plumbing and may lead to a home being considered uninsurable.

Houses with a history of insurance claims may be uninsurable

Houses with a history of insurance claims may be deemed uninsurable by providers. This is because insurance companies need to predict whether a policyholder will cost them more or less than average. Policyholders who don't file claims or file very few are the reason insurance companies can make money and stay in business. Therefore, if an applicant has a history of filing excessive insurance claims, an insurance company may deem the applicant unattractive since they are likely to be an expense.

The types of claims filed can also affect a homeowner's insurability. For example, claims related to lawsuits, such as from a dog bite or a safety hazard that caused injury to someone, will raise red flags. Even if a homeowner does not have a history of filing a lot of claims, they could still run into problems if the previous owners of their home filed many claims. In other words, it may not be the homeowner who is high-risk, but their house.

In addition to a history of claims, there are several other factors that can make a house uninsurable. These include the location of the property, hazardous home features, home maintenance issues, the age of the home, and poor construction or remodelling.

Houses with hazardous features, e.g. a pool, may be uninsurable

Houses with hazardous features may be deemed uninsurable by insurance companies. Insurers want to ensure they are not taking on too much risk by insuring a property. If they deem the risk excessive, they may reject an application for coverage or cancel an existing policy.

• Swimming pools and hot tubs: These are considered "attractive nuisances" by insurers, as they are appealing yet hazardous objects that may lead to drowning accidents.
• Trampolines: Due to the high frequency of injuries associated with trampolines, they are seen as a liability risk.
• Treehouses: Treehouses are considered a liability hazard as someone could fall out and sustain injuries.
• Wood-burning stoves: While they can reduce energy costs and be aesthetically pleasing, wood-burning stoves increase the risk of house fires and, consequently, insurance premiums.
• Wooden roofs without fire-retardant coating: Such roofs are considered a fire hazard.
• Excessive clutter: Accumulation of excessive personal belongings, whether inside or outside the home, poses a safety hazard.
• Unstable tree limbs: Tree limbs or entire trees that could fall on the house are considered hazardous.

While some of these hazardous features may result in higher insurance premiums, having multiple hazardous features could lead to an insurance company denying coverage.

Frequently asked questions