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Just how old is that house?

The age and condition of a house is a major underwriting consideration, since older homes use building materials that
are more expensive or aren’t widely used today. For example, your home may have plaster walls, carved molding,
solid-brass fixtures, or stained-glass windows. Older homes also often don’t meet modern building code
requirements. Some insurers may decline to cover a home that has old wiring, needs repair, or is on a list of historic
properties, citing the high cost and difficulty of replacing materials since historic landmarks must be renovated as
originally built.
Keep in mind an old house isn’t necessarily a historic house. The National Park Service approves and monitors historic
properties based on an evaluation process that usually begins with a local preservation office. To qualify, a property
must be at least 50 years old and connected to significant historical events or individuals; considered the embodiment
of a particular master or historic style; or provide important historical information.
Registered homes present their own set of insurance challenges, and it’s best to work with an insurance professional
who specializes in historic properties. The process begins with a detailed risk appraisal to determine the age and value
of the property. You will then catalogue the condition, types of materials, and features that are present. Be sure the
company you select has experience in restoration and can calculate the true cost of rebuilding your home.

Guaranteed replacement cost is a must

It is absolutely essential that you obtain coverage that pays the full replacement cost of the original materials used to
build your home. Otherwise, you will have to settle for “similar” or “functionally equivalent” materials. Look for
insurers that are willing to restore the home to its original condition (known as “like kind and quality”), regardless of
the policy’s limits.
You’ll also want coverage that takes into account the cost to meet newer building codes. Make sure there are no
limits on the extra costs required to rebuild in compliance with changes in local codes and ordinances.
Many historic homes have detached garages and outbuildings. The entire property should be part of the appraisal
process. A typical homeowners policy has a dwelling limit of 10% to cover the cost of replacing outbuildings. Your
insurance professional should adjust the limits to adequately insure your unattached structures. Some insurance
companies will insure rare plants and trees on your property, even covering individual plants.
In addition to the house itself, you’ll want the contents properly insured. Many older homes have antiques, rare
artwork, and period furnishings. Your insurance professional may suggest separate coverage since the normal
sublimits in a policy may be too low. For example, you can add a scheduled personal property endorsement to
increase the limits for specific items. Or you may need a fine arts floater, which provides full replacement value and
insures against breakage. A floater can cover paintings, sculptures, collectibles, china, furniture, oriental rugs,
tapestries, antiques, and other rare items.

Additional considerations

Choose a policy that covers all perils. You are better off purchasing an “open-perils” policy over one that
covers only perils named in the policy, such as fire, wind, hail, theft, etc. However, keep in mind that even an
open-perils policy will list exclusions. These may include flooding, earthquakes, mold and fungus. Talk to your
insurance professional about the types of perils your policy should cover.
Make sure your policy will pay full replacement cost for a roof. Standard homeowners coverage
reimburses for only the cash value of the roof beyond a certain age. Historic homes often have elaborate
roofing that can be quite expensive to restore.
Consider extra coverage for older pipes and utility lines. Water backup coverage protects against sewer
or drain backups. A service line endorsement covers the utility lines that run from your house to the street and
that you are responsible for repairing.
Be sure your policy covers loss of use of the property in case you have to move out while restorations are
being made. Because historic homes require specialized materials and highly skilled labor, rebuilding can take
longer. Look for coverage that doesn’t have limits on what it will pay.
Reduce your premiums by increasing your deductibles. You’ll also find insurance more available and
affordable if you’re willing to make upgrades to your property. For example, many insurance companies will not
insure a house with knob-and-tube wiring, a type of electrical wiring used in century-old homes that can be a
safety hazard.
Look for an insurer that will be your partner. In addition to providing the coverage you need, your
insurance company should be able to offer professional risk-management advice and recommend builders and
restoration experts to help you maintain your vintage home.
The International Risk Management Institute notes, “It is a rare homeowner who understands the importance of
correctly establishing the cost to rebuild his or her residence, and owners of historic homes must become well
educated on the importance of establishing the cost that would be required to rebuild their homes.”
While you may not live in a Newport mansion or the Biltmore Estate, you still own a unique slice of American history.
Take the time to learn about your home’s history and its place in your community. It’s exciting to know that your
property may be a local or national landmark. At the same time, you’ll be helping to establish its value and properly
insuring it for generations to come.