Tom's BlogWe’ve helped thousands of home buyers in High Point, Greensboro and all over North Carolina get the right protection for what’s most likely the largest investment they have ever made. Over the years, we’ve come across many challenges especially recently, as insurance companies have tightened up underwriting for homeowners insurance. One of these challenges include problems insuring older homes.
Before I get into these problems and what you need to know about insuring older homes, let me explain why I am sharing this with you. As a past REALTOR, I know that there are many factors that can pop up and kill a real estate deal. Getting a house under contract doesn’t mean your commission is in your bank account. Now that I am responsible for providing homeowners insurance for home buyers, I never want to be the one that kills a sale. That’s why I want you to know about any potential insurance pitfalls BEFORE you lose a sale.
It’s important to understand that insurance companies do not favor older homes. You may even find that some insurance companies won’t insure older homes. Why? It’s simple. Older homes have more claims and claims cost the insurance companies money. Obviously, there are many North Carolina insurance companies that do insure older homes. It is more expensive than insuring a newer home and those companies that do, will do so provided the house has updated the major systems.
There are four major systems in a house that insurance companies are concerned about in older homes. Older homes are defined as homes over 25 years old.
Electrical– Most companies today won’t insure a home with fuses instead of circuit breakers. Fuses are a huge hazard and I’ve handled my share of fire claims from old fuse boxes. Fortunately none of my clients have been injured or worse but I know they are very dangerous. You should also be concerned about homes with knob and tube wiring and aluminum wiring. Many companies won’t insure these homes.
insuring older homes
Damage from leaking galvanized plumbing
Plumbing– Galvanized plumbing is frequently a negative. Some companies won’t write homes with galvanized plumbing and some will. You just have to know who to go to.
Heating– Older heating systems can be problems as well especially, oil and gas furnaces. One common problem with these units is with age, the furnace can crack and pour black soot into the home. You can’t imagine the mess this could make.
Roof– Depending on the type of roof, some older roofs can cause problems too.
So, what can you do if you list or sell an older home with any of these issues?
First, the more serious issues must be resolved. Have the seller replace fuses with circuit breakers. It could save someone’s life.
If the roof appears to have any broken shingles, it must be replaced.
Have a qualified technician service the furnace to make sure it’s running properly.
Second, if the plumbing is galvanized, the home inspector will most likely raise flags. If they do, it will have to be addressed to save the deal. If not, you’re going to have to find an insurance agent that can insure it.
Hopefully this will help you be prepared the next time you list or sell an older home. If you ever have any questions, feel free to give us a call.
Thank you for your business and referrals!
Tom
