As you sit in the living room of your old home and admire all the intricate furniture, designs, and architecture, think about what might happen if a roof leak or a fire ever occurs. Most of us would be devastated to lose the beautiful heritage and soul of our period homes.
This is why you must have an insurance policy that will let you restore your antique home to its original form after an accident. We have compiled a complete guide to period house insurance to help you protect what you love.
What is Period House Insurance?
Homeowners insurance refers to a type of property insurance designed to cover privately-owned homes and all the things within them.
Period house insurance policies typically cover damage and destruction to a home’s interior and exterior, personal liability for harm to others, and the loss or theft of possessions.
Why You Should Get Homeowner’s Insurance for Old Homes
Homeowner’s insurance policies are multi-line policies. This means that your premiums cover your property insurance along with liability insurance.
Liability coverage means that if an individual that isn’t covered by your policy is injured or killed while they’re on your property, your homeowner’s insurance policy will cover all your personal legal operations. Your old home insurance will also cover your legal responsibility for any damage or destruction of an outside individual’s property while they’re on your property. Conveniently, homeowner insurance coverage for old homes also extends to cases where damage or injury happens near your property, such as when the branch of a tree growing on your property drops on a parked vehicle on the street.
Property coverage will include any damage to your house’s structure, along with any personal property located inside that gets damaged. This includes even the clothing, appliances, furniture, and other contents in your home. Your insurer will provide compensation for damage to your house from any covered disasters such as fire, hurricane, lightning, vandalism, or others. Good policies will also include any expenses of staying in a hotel/apartment while your home undergoes repairs after an insured disaster.
However, you may have to separately cover any sheds, freestanding garages, or other such constructions on your property.
Getting period house insurance often becomes necessary as almost all mortgage companies ask for insurance coverage for the full or fair value of a property. Without it, they won’t be interested in making a loan or financing a residential real estate transaction.
Homeowners insurance for old homes vs. new homes
Insurance for older homes is generally more complicated than modern constructions as it’s riskier for insurance firms. They are more vulnerable to damages from disasters like fire or issues in the roof. Plus, the premiums will likely be higher than in modern homes, and you might find it more difficult to find a suitable policy.
The insurance company examines the replacement cost value of your house when determining your insurance premium. The replacement cost refers to the funds required to replace or restore your home in the current market conditions. Replacement costs for period homes are generally higher because of their antique nature. Specialized tools and labor are needed to maintain the historical integrity of the old property.
Most old homes will have old wiring that can be dangerous and old plumbing mechanisms that have faced many years of erosion. This, coupled with increased susceptibility to damage, makes period homes a high-risk cover for insurers. Thus, they will charge a higher premium than the market average.
Insurance Options for Period House Owners
There are various policy options in the market that cover varying levels of risk at different rates. As a homeowner, you will have to decide which policies are best suited to your needs. Let’s start with the simplest policy available for old homes.
HO-1 Policy (Basic Form)
This is the most basic and least expensive class of homeowner’s insurance. HO-1 insurance policies typically only cover residence protection and not personal property damage. Basic form insurance is generally considered to be inadequate by most mortgage companies. As a homeowner who is financing their home, this policy may not be an option. However, it can work for some old homeowners who are not in a financing process and only want the bare minimum.
This policy covers a few basic categories of risks for your home, such as:
- Theft/malicious mischief
- Damage from vehicles
- Riot or commotion
HO-3 Policy (Special Form)
HO-3 policies are the most commonly used homeowner’s insurance for old homes. Special form policies typically provide good coverage for older homes that have been renovated to the existing building code standards.
For example, an HO-3 policy would provide great cover for old homes that have upgraded their plumbing and wiring with modern materials or improved their walls with sheetrock.
The HO-3 policy is considered an “open peril” policy, meaning it covers any potential disaster or damage that isn’t otherwise excluded specifically in the agreement. This is in contrast to the “named perils” category of HO-1 policies that only cover specific disasters mentioned in the policy documents.
Here are a few examples of damages that may be excluded from most Special form policies:
- Nuclear disasters
- General wear and tear
HO-8 Policy (Old Home Form)
Insurance firms specifically created this policy for period homes. The general rule of thumb is that an Old Home Form policy is viable when the replacement cost value of your old home exceeds its current market value. They are the most used policies by owners of old homes as they also tend to be cheaper than traditional home insurance covers.
When searching for a suitable insurance policy, make sure to evaluate the breadth of coverage offered, not just the price. Look for policies that will help you maintain your home’s original structure by paying for materials that are not common anymore. For example, most old houses will have walls made with lath and plaster rather than the more common sheetrock. Make sure that your policy can cover the costs of atypical materials like these.
Many insurers will only compensate for a depreciated value for damages in Old Home Form policies. This means that they will compensate for losses after subtracting depreciation, so you could end up with much less money than you actually need for a restoration. This is the biggest drawback of this type of coverage. The settlement you receive may not provide enough money to restore your home to its original splendor.
Good HO-8 policies provide excellent cover for old homes as they were specifically designed for that purpose. Take your time to find a plan that gives you the best coverage possible.
High-Value Homeowners Insurance
These policies generally ask for higher premiums than the rest of the options on this list. However, they may be the best option for many period house owners. High-value homeowners insurance covers houses that have an above-average value.
It’s perfect for people with period homes valued over $750,000 and built with construction materials and methods that are hard to come by today. A high-value insurance plan gives you bigger limits in your policy, which is essential when your house has a high replacement cost value.
Tips for Period House Insurance
Go with Higher Deductibles
It’s a simple formula: higher deductibles will lead to lower premiums as most companies will give you premium credits. Small claim submissions that result from lower deductibles jeopardize price stability and coverage availability. By increasing your deductible to $1,000, $2,500, or $5,000, you can avoid the risk of increased premiums from filing claims.
Save on Insurance by Staying Ahead of Repairs
Stay ahead of repairs and do not let any inspection dates go by. Watch out for warning signs in the roofing and electrical and plumbing systems. Check your heating, air conditioning filters, and gutters for any unwanted debris. Make quick repairs for issues as they appear and prevent mold in your home.
Get All Policies with One Insurer
If you consolidate all your policies with one insurance provider, you will likely be able to get package discounts for bundling and an overall smoother experience.
Period house insurance is typically more complicated and expensive as compared to a homeowner’s insurance for modern homes. But there is a certain charm in old houses that makes you want to spend effort in preserving their architecture.
Get a comprehensive homeowner’s insurance policy for old homes that will allow you to restore your house’s original beauty in case of an accident. Read over any fine print vigilantly and recheck your homeowner’s insurance coverage annually to ensure the policy is up to current standards.
Visit our website for more expert tips on how you can upgrade your lifestyle in your period home while maintaining its history and character.