Who hasn’t run their eyes over an exquisite Victorian home dripping with gingerbread trim, relishing the craftsmanship and graceful lines? Older homes are a beauty to behold and can be lovely to live in. But they can come with some downsides, like smaller closets, drafty windows — and a few challenges when it comes to insurance coverage.
While the features of older homes are charming — plaster walls and wood floors — they can be more expensive to repair. The commonly used copper pipes can develop pinholes that leak water behind walls, and aluminum wiring can overheat and cause fires. Additional hazards and repair costs associated with a more “mature” home can add to the cost of its insurance premium.
But a house doesn’t have to be a century-old Victorian to be challenging to insure. The once ubiquitous Sears & Roebuck kit homes — many put together by homeowners themselves — were sold up until 1942. And early Modernist homes often featured flat roofs that can be prone to developing leaks. If your home is truly historic, there may be local ordinances that dictate what you can and can’t do to update it, such as substituting modern materials on the facade.
There are insurance options for older homes, but they can be more expensive and afford less coverage. The standard insurance policy for a newer home is an HO-3. Owners of older homes that don’t qualify for an HO-3 policy may be offered an HO-8 policy instead.
There are major differences between the two. First, an HO-8 policy may not cover the full replacement cost of your older home, as it might cost more than the home is worth to repair it with materials of the same type and quality. Instead, these policies pay the actual cash value of your home at the time of loss — meaning, depreciation is deducted from the payout.
Standard homeowners policies typically insure against “all perils,” or all causes of loss unless that cause is specifically excluded. However, many HO-8 policies cover only 10 causes of loss:
· Fire or lightning
· Windstorm or hail
· Explosions
· Riot or civil commotion
· Damage by aircraft
· Damage by vehicle
· Smoke damage
· Vandalism
· Theft
· Volcanic eruption
Some things that may be specifically excluded are losses due to the failure of water heaters, falling objects, power surges, and freezing pipes.
Given the potential complexity of insuring an older home, it’s prudent to get advice from an experienced and knowledgeable We Insure agent. Our agents are familiar with a wide variety of policies and endorsements to custom-fit a homeowners policy to your unique situation, ensuring your coverage needs are met. They also have relationships with a broad spectrum of insurers and can offer options from many different companies to find you the best selection of coverage and premiums.
Not all insurance is created equal. Do your homework, especially for an older home, and review your coverage with an agent regularly. As you renovate and repair, you may be increasing the home’s value while also decreasing risk, which could lower premiums.
Source
https://www.bankrate.com/insurance/homeowners-insurance/ho-8-insurance/#what-does-ho-8-insurance-cover
