Insurability Issues when Buying an Older Home
Thinking about buying a character home? The issues outlined below may impact your ability to insure your home. And if the insurance industry won’t cover a home, the banks won’t provide a mortgage.
According to the Financial Services Commission of Ontario, if you are looking to purchase an older home that has galvanized steel plumbing, 60-amp electrical service, knob and tube electrical wiring, a wood-burning stove, a fuel oil tank or an old roof, be sure to factor the cost of necessary upgrades into your home buying decision, and always get a home inspection done before purchasing. You may need to make upgrades prior to an insurance company providing you with insurance coverage.
Galvanized steel plumbing concerns
Galvanized steel pipes, commonly installed in homes prior to 1950, have an average life expectancy of 40–50 years. Over time, the galvanized steel pipes begin to rust or corrode from the inside out, resulting in reduced water pressure and restricted water flow. This presents an increased risk of leaks or ruptures occurring in the pipes and the potential for flood damage.
Your insurance company may require you to replace galvanized steel piping with copper and plastic piping before providing you with insurance coverage.
The dangers associated with 60-amp electrical service
Insurance companies are concerned that the 60-amp electrical service, common in homes built prior to 1950, poses the threat of overuse and overheating, potentially increasing the risk of an electrical fire and a subsequent claim.
Before providing you with insurance coverage, your insurance company may require you to upgrade your 60-amp electrical service to 100 amps (the standard for new home construction) or install a switching device that allows for the operation of only one major appliance at a time.
The problem with knob and tube wiring
Knob and tube wiring, commonly found in homes prior to the 1950s, consists of parallel hot (black) and neutral (white) wires, separated by knobs (or insulators) and ceramic tubes.
Knob and tube wiring is considered a higher risk than contemporary wiring installations mainly because:
- There is no ground wire (in contrast to contemporary wiring).
- Given their age, the wires are highly susceptible to wearing and exposure, presenting a serious safety hazard.
- The unintentional contact of the hot and neutral wires may potentially cause an electrical fire.
As a result, you may be required to replace all exposed knob and tube wiring with approved permanent wiring material before an insurance company will provide you with home insurance coverage.
Note: Some insurers may consider covering homes with wiring issues if they are inspected by the Electrical Safety Authority (ESA) in Ontario and deemed safe. It’s best to speak to your insurance agent or broker about your specific situation.
The dangers of aluminum wiring
If your home was built between the mid 1960s and late 1970s it may have aluminum wiring. Aluminum wiring itself is safe if proper connections and terminations were made without damaging the wire, and if any devices used are approved for use with aluminum wiring. However, some homes have aluminum wiring that were not properly installed, leading to safety hazards.
Insurance companies will not provide or renew your insurance coverage if the aluminum wiring is not properly connected. You may be required to work with a certified electrician to check, repair or replace the aluminum wiring. Talk with your insurance company to learn their requirements.
Wood-burning stoves can be a hazard
If they are not installed and used properly, wood-burning stoves can pose a serious fire hazard.
To reduce potential risk, your insurance company may require that your wood-burning stove be inspected by a certified Wood Energy Technical Training (WETT) technician and certified by the Underwriters’ Laboratories of Canada (ULC), Canadian Standard Association (CSA) or Warnock Hersey before agreeing to provide you with home insurance coverage.
Similarly, your insurance company may request that you have your wood-burning stove thoroughly cleaned and inspected by a professional sweep or technician at least once each year, prior to renewing your policy.
Why your insurance company is asking you to replace your fuel oil tank
Tanks 25 years or older are highly susceptible to rusting, deterioration and leakage and are considered environmental hazards. If a fuel oil leak occurs and goes undetected, the environmental cleanup for such a situation can be immense. A pinhole leak can spill 750 litres of oil in eight hours and have significant cleanup costs.
Most insurance companies will only insure a fuel oil tank provided it is less than 20–25 years old and has been certified by the Standards Council of Canada (SCC) or the ULC.
If your oil tank is 25 years or older, your insurance company may require that you remove and replace it with a newer tank or change how your home is heated by installing a gas or electrical furnace, prior to providing you with home insurance coverage.
Given the wide range of inspection/upgrade requirements that insurance companies may have, it’s always best to speak to your insurance agent or broker about your specific situation.
Old roofs increase your chance of a leak
Roofs typically have a life span of 20 years, so if your roof is older than that, it increases your chance of a leak. With increased waterfall yearly, you may find your roof deteriorating more quickly. Your insurance company may require you to replace your roof prior to providing you with home insurance coverage.