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Insurance For Older Homes
Home insurance typically covers costs of structural or possession damage, liability, and relocation costs if the home should become unlivable during rebuilding/fixing. Homeowners insurance for older homes typically involves the same types of insurance for liability and possessions (furniture, jewelry, etc.) but the coverage for cost of structural repair or rebuilding can be different. Older homes, especially historic homes, can be very costly to replace and the cost of rebuilding can be significantly higher than an appraised value.
Insurance For Older Homes Coverage
Typical homeowners insurance covers the cost of repair or replacement as a result of one of the following disasters:
- Damage from aircraft
- Wind or hail damage
- Riots or civil unrest
- Fire or lightning damage
- Damage from vehicles
- Volcanic eruptions
- Theft or burglary
- Self-damage such as part of the roof or wall falling in on itself
Some policies include coverage for damage resulting from a few other disasters:
- Falling objects
- Water damage (not flood)
- Snow, sleet or ice damage
- Electrical surcharge damage
Individuals living in an older home, but not a historic home may wish to purchase a regular home insurance policy, one that would cover damage and value, but would not cover the cost of rebuilding an older home with the same materials and structure. In this case the insurance company would pay the costs equal to the value of the home instead of what it would cost to rebuild the same structure using the same materials but with today’s labor costs.
Insurance For Older Homes Policies
Home insurance is typically sold in packages pertaining to covering damage done to the structure of the home, interior possessions, and varying degrees of protection from different elements. These packages are named HO-1 through HO-8. Although not available in all states, where available HO-1 is the homeowners insurance package that covers the bare minimum and the degrees of protection increase with each HO number. Most homeowners have an insurance policy that is closest to the HO-3 which covers:
- Damage to structure
- Damage to contents, property, and possessions
- Liability coverage
Insurance for older homes is considered to be the HO-8 insurance package which allows homeowners the basic protection of an HO-3 plan. However, instead of covering the cost of rebuilding a damaged structure, it insures the house for the market value, allowing the homeowner a lower rate of insurance.
Insuring an older home based on value is far less expensive than insuring the house based on replacement cost. Interior features such as antique doors can be insured under homeowners insurance and in some cases, instead of covering the cost for rebuilding such a feature, the insurance company will pay to replace the feature (if a replacement period door, for example can be found).
Many insurance companies are reluctant to insure an older home because of older electrical or plumbing systems. Some insurance companies will refuse to cover a house as a result of these features and others may include provisions that will insure the house but not the outdated electrical or plumbing features or any damage resulting from these outdated systems. Sometimes a home insurance company requires a thorough inspection of the systems before insuring.
Older homes that qualify as historic homes can find help with the National Trust for Historic Preservation. This trust is designed to protect and preserve historic buildings and help provide insurance for older homes.
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