Homeowners Insurance For New Homes Vs Old Homes

23 September 2021 Category: Home Insurance

Homeowners Insurance for New Homes Vs. Old Homes

Homeowners insurance is a form of property insurance that covers losses and damage to an individual’s residence while protecting their furnishings and other assets in the home.

Insuring Old and New Homes

When looking for homeowners’ insurance for a new home, you’ll discover that there are many insurance companies to choose from. However, the options might be limited when it comes to insuring an old home. Home insurance companies perceive homes that are more than fifty years old as high-risk. Older homes often require expensive and frequent repairs, which most insurers prefer to avoid. They might assess the risks and values related to your house to determine the monthly premium you’ll be paying. For older homes, replacement costs are often higher due to historic or specialty materials that may be required to restore your home, resulting in higher premiums for homeowners.

Are Older Homes More Expensive to Insure?

Insuring older homes is usually more expensive. Repairing an older home requires the use of specialized materials and skilled experts. For instance, many older homes have plastered ceilings and walls with non-standard doors and windows. If some part of an older home sustains damage, you might have to employ a skilled expert who can reconstruct the door or recreate a similar design that might not be readily available in the market.

Older homes also pose higher risks than newly constructed houses, as they are often made with materials that have lower resistance to fire or inclement weather. In addition, many contain original wiring or plumbing, which can wear off or corrode over time. All of these present higher risks to the insurer who may charge higher premiums for an old home to set off the risk borne by them.

Coverage Options Available for Old Homes

There are multiple options available for insuring older homes.

Basic Form (HO1)- This policy covers damages caused by

  • Fire or smoke
  • Explosions
  • Lightning
  • Hail/Windstorms
  • Theft/Vandalism
  • Damage from vehicles
  • Riots or commotion

Special Form (HO3)

Special form home insurance is categorized as an “open peril” policy that protects homeowners from any risks their homes are exposed to unless otherwise stated or excluded in policy documents. Most HO3 policies will exclude the following types of damage:

  • Earthquakes
  • Floods
  • Landslides
  • Nuclear accidents
  • General wear and tear

Old Home Form (HO8)

Since older homes were generally built to less stringent building codes than newer ones, insurance companies have created a specific category to classify old homes– type HO8. These policies often only cover basic perils, similar to those listed under HO1 policies. Historical homes and landmarks are eligible for protection under the HO8 category.

If you have more questions related to insuring your home, contact our experts at Massive Insurance today. Serving Pasadena and surrounding cities in California, we are ready to help you find the right coverage for your property.