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Older homes can possess charm and personality, but they can also come with challenges. Some of the things that make older homes unique may also make them more difficult to insure, which can lead to higher homeowners insurance rates.
Finding out how much homeowners insurance costs may be trickier for older homes. And it’s possible you’ll need a specialized policy for your older home.
Key Points
• Older homes cost more to insure due to higher wear-and-tear risks and expensive rebuilding costs.
• Roof age, electrical systems, and plumbing materials heavily influence insurance rates for older homes.
• Homes over 40 years old may need an HO-8 policy, which pays actual cash value minus depreciation.
• Ordinance coverage helps pay to bring older properties up to current building codes after covered losses.
• Upgrading roofs, bundling policies, or installing security systems can help lower older home insurance premiums.
Why Are Older Homes More Expensive to Insure?
Homeowners insurance for older homes can be more expensive to insure because insurers view older homes as high-risk. Older structures have seen more wear and tear and are therefore more likely to cause problems. Also, the cost of rebuilding an older home can be higher than its market value, especially if the materials used are no longer available or aren’t up to code.
Key Factors That Affect Insurance Costs for Older Homes
There are several factors that affect insurance costs for older homes. Roof age and materials, electrical systems, and plumbing systems are three key factors.
Roof Age and Materials
An older roof may be less likely to withstand damage. The materials that were used to construct the roof in an older home may also cause concern, as the materials used years ago were heavier and less durable than those used today. Depending on the age and roof material, the property may need a full roof replacement to be eligible for insurance coverage. However, it is important to understand the answer to the question does homeowners insurance cover roof leaks. Not all roof leaks may be covered under homeowners insurance, regardless of the structure’s age.
Electrical Systems
Older homes with original electrical systems are at a higher risk of fire or other issues. Electrical codes are more strict now than they were a few decades ago. To be eligible for coverage, some insurance companies may require you to have your electrical system professionally decommissioned and a new system installed before they will insure your home.
Plumbing Systems
Older plumbing systems may have materials that are less durable or have just become worn out over time. These older materials could be more susceptible to leaks, blockages, and burst pipes. It is important to understand does homeowners insurance cover plumbing issues and water damage.
What Is an HO-8 Policy and When Do You Need One?
Standard homeowners insurance policies include HO-2, HO-3, and HO-5 policies. An HO-8 policy is a modified homeowners insurance policy version that provides coverage for homeowners who are unable to get an HO-3 policy for their older home. This is typically for homes that are more than 40 years old.
It is important to note that HO-8 policies don’t operate on replacement cost; the insurance company will pay out based on actual cash value, deducting for depreciation in your claim payout. This will mean you will have to cover the remaining amount of damage on your own.
A HO-8 policy will cover the insured’s dwelling, personal property, liability, and loss of use against the most common perils, including wind, smoke, hail, aircraft, vehicles, volcanic eruption, explosion, vandalism, theft, or riot. However, an HO-8 policy will not cover as much as an HO-3 or HO-5 policy will cover. An HO-8 policy will not cover perils including earthquake, flood or water damage, falling objects, hurricanes, mold, intentional damage, building code enforcement, general wear and tear, vandalism to vacant dwellings or government actions.
If your home is historic or would otherwise be too expensive to replace, a modified HO-8 insurance policy could be a good fit for you, but you should shop around before changing homeowners insurance .
Additional Coverages to Consider for an Older Home
If you are looking for additional coverage for your older home, you could consider high-value homeowners insurance. This will cover rebuilding high-value historic properties following a disaster. You could also look into are home warranties worth it, which would cover repairs or replacements of appliances and systems due to normal wear and tear.
There are also additional coverage policies that you could possibly purchase for an additional cost, such as home renovation coverage, service lines coverage, hidden water damage coverage, roof replacement coverage or loss of use/ additional living expense coverage. Of course, these additional coverages come at a cost, so you should consider cost vs. coverage.
How to Lower Homeowners Insurance Costs on an Older Home
Fortunately, there are ways to lower your homeowners insurance costs if you have an older home. One option is to bundle your homeowners insurance with another policy, like auto insurance. Some companies offer discounts for bundling. Another option is to increase your dwelling coverage or personal coverage deductibles, if possible. You could also look at adding a security system, which may make you eligible for a discount. Upgrading your home’s wiring and/or replacing your roof may lower your homeowners insurance cost as well.
The Takeaway
All homeowners should have homeowners insurance. If you have an older home, it could be especially important to have homeowners insurance due to the inherent risks that come with this property. This is the case even though homeowners insurance for older homes is often more costly and difficult to obtain.
When you’re ready to shop for homeowners insurance, SoFi can help. Our online homeowners insurance comparison tool lets you see quotes from a network of top insurance providers within minutes, saving you time and hassle.
SoFi brings you real rates, with no bait and switch.
FAQ
At what age is a home considered old for insurance purposes?
Some insurance companies consider homes built more than 40 years ago to be old for insurance purposes.
Can you get standard homeowners insurance on an older home?
Older homes often require specialized homeowners insurance due to higher risks and replacement costs. They may have outdated plumbing, electrical wiring, roofing, and building materials, which can increase the likelihood of damage or costly repairs.
Does updating your roof or wiring lower insurance rates on an older home?
Yes, updating your roof and wiring can lower insurance rates on an older home. However, the size of the discount depends on the insurance company, the home’s location, and the specific improvements that are made.
What is ordinance or law coverage and do older homes need it?
Ordinance or law coverage is part of a homeowners insurance policy that pays for the extra cost of bringing a home up to current building codes, ordinances, or laws after a covered loss. Older homes are more likely to need it because they were built under less strict building codes.
Are older homes harder to insure than newer homes?
Yes, older homes are generally harder and more costly to insure than newer homes. This is due to factors like higher replacement costs, outdated systems, and greater risk profiles.
Photo credit: iStock/Mableen
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