Home Insurance For Older Homes: What You Need To Know


WRITTEN BY: Mark Romero

UPDATED: SEPTEMBER 15, 2023 | 1 MIN READ

With their unique designs and rich histories, older homes hold a special place in many neighborhoods. But while they exude charm and craftsmanship, insuring them presents unique challenges. 

Their distinct architectural features add character and can also drive up insurance costs. Factors such as the home’s age, structural integrity, and the potential costs of restoring original elements complicate the insurance landscape. This article aims to simplify insurance for older homes, explaining the intricacies and guiding homeowners through the process.

Challenges of insuring older homes

Insuring older homes isn’t as straightforward as one might think. From their historical significance to the aging systems within, these properties bring with them a unique set of challenges. 

While their charm and character are undeniable, they often come with higher risks and costs that insurance companies can’t ignore. This section will explore the hurdles homeowners face when seeking insurance for these vintage gems.

Historical significance and architectural integrity

Older homes often possess unique architectural elements and materials, which can be irreplaceable. Restoring these can be costly, making them higher risks for insurance companies. 

This is especially true in parts of cities designated as “historical areas” because you often need approval from the local historical society to make repairs. In many cases, historical societies require home repairs to be completed using specific materials to match the colors and style of the time period the house was built in.

Structural and system concerns

It’s common for older homes to have outdated electrical and plumbing systems, which increase the risk of accidents or damage. This also increases the cost of replacement because if these systems need to be replaced, they often have to be completely overhauled to be brought up to code. Doing this while still maintaining the historical condition of the home can be costly and complicated.

Maintenance and condition

Due to varying degrees of care or neglect over the years, the state of older homes can differ greatly. Homes that haven’t been well-maintained might be seen as higher risks by insurers.

Understanding insurance costs for older homes

The age of a home significantly impacts its insurance premium. As homes age, the costs associated with insuring them typically rise due to the perceived increased risk. Let’s explore how age correlates with insurance costs:

  • New Construction: New constructed homes have the lowest average annual premium of $966 or $80 monthly.
  • 10 Years Old: Once a home reaches a decade in age, insurance premiums witness a noticeable hike. The average annual cost is $1,478 or $123 monthly, marking a 53% increase compared to new constructions.
  • 20 Years Old: As homes cross the 20-year mark, their insurance premiums increase further to an average of $1,670 annually or $139 monthly, a 13% rise from 10-year-old homes.
  • 30 Years Old: The rising cost trend slows considerably as homes age. At 30 years old, the average premium is $1,694 annually or $141 monthly, a minor increase of 1% from 20-year-old homes.
  • 40 Years Old: There’s almost a plateau in insurance costs when a home reaches 40 years. The average annual premium is $1,698 or $142 per month, showing a marginal rise of 0.23% from the 30-year-old homes.
  • 50 Years Old: Homes that are half a century old continue to see minimal increments in insurance premiums, with the average annual cost being $1,700 or $142 monthly, up by only 0.12% from 40-year-old homes.

Selecting the right insurance company for your older home

When insuring an older home, selecting an insurance company that offers competitive rates and understands the unique needs of such properties is crucial. Based on the data provided, here’s a breakdown of several nationwide insurance companies and their rates by home age:

  • Allstate: Rates start from $1,033 for new constructions and steadily rise to $1,759 for homes that are 50 years old.
  • American Family: Premiums begin at $1,422 for new homes and peak at $2,422 for 50-year-old homes, reflecting a significant cost increment as homes age.
  • Amica: Known to be the cheapest option for homes aged between 10 and 50 years, Amica’s premiums begin at a low of $772 for new constructions and only increase to $1,144 for homes aged 50 years, making it a competitive choice for older homes.
  • Farmers: Starting at $1,093 for new builds, their rates rise to $1,516 for 50-year-old homes.
  • Nationwide: Beginning at a competitive $693 for new constructions, the premium goes up to $1,542 for homes that have seen half a century.
  • Progressive: The most affordable for new constructions at $533, their rates increase to $1,810 when a home reaches 50 years.
  • State Farm: With rates starting from $885 for new homes, the premium slightly increases to $1,532 for 50-year-old houses.
  • Travelers: Their premiums commence at $929 for new constructions, with a peak of $1,692 for 50-year-old properties.
  • USAA: Starting from $706 for brand-new homes, the rate increases marginally to $1,475 for homes aged 50 years.

Challenges and solutions of insuring older homes

Owning an older home comes with unique challenges when seeking insurance coverage. Understanding and navigating these challenges can significantly influence the kind of insurance you get and the premium you pay.

Why older homes can be costly to insure

  • Replacement Cost vs. Market Value: Older homes often have higher replacement costs than their market value due to using custom or antiquated building materials. If damaged, these can be expensive to repair or replace, leading to higher premiums.
  • Perceived Higher Risk: Insurers often view older homes as high-risk investments because they might be in disrepair or more susceptible to structural damage.
  • Modern Code Requirements: If there’s a need to replace or repair parts of an older home, the new components must meet modern building codes, which can be more expensive.

What can be done?

  • HO-8 Insurance Policy: An HO-8 policy is tailored for older homes where the replacement value might exceed the market value. It covers the structure, personal liability, and personal property. However, it pays out based on actual cash value, deducting for depreciation. So, if a unique feature of your older home gets damaged, your payout might not cover the entire replacement cost.
  • High-value Homeowners Insurance: If you own a historic home, it might be worth looking into insurance companies specializing in high-value properties. They might be more accustomed to the needs of older homes, ensuring your home gets the right coverage.
  • Regular Maintenance: One of the best ways to reduce your insurance premium is by keeping your home in excellent condition. Regularly check and maintain the essentials, like plumbing and electrical systems. If insurers see that your old home is well-maintained, they might offer better rates.

7 Tips for reducing your home insurance premiums

Insuring an older home doesn’t necessarily mean accepting exorbitant premiums. Even if your property has aged beyond 30 years, numerous strategies can help you secure a better rate. 

1. Accurate home replacement estimate

Regularly reassess the replacement value of your home to ensure you’re only paying for the coverage you need. This can prevent overpaying premiums for values that don’t match your home’s worth.

2. Embrace higher deductibles

It’s a simple equation – the higher the deductible, the lower the premium. You can substantially reduce your annual or monthly premium by agreeing to shoulder a bit more of the financial responsibility during a claim.

3. Thoughtful claims management

Not all damages require filing a claim. Evaluate the situation and consider out-of-pocket repairs for minor issues. A cleaner claim history can make you a more appealing customer to insurance companies, leading to better rates.

4. Bundle your policies

Many insurance providers offer discounts when you bundle multiple policies, such as car and home insurance. This not only provides a financial break but also simplifies your insurance management.

5. Inquire about discounts

Insurance companies often offer various discounts that you might qualify for. Whether it’s a discount for security systems or for being a long-term customer, always ask about potential savings.

6. Regular home maintenance

As previously mentioned, well-maintained older homes can be less risky to insurers. Completing regular home maintenance, like routine checks, increasing the quality of materials, and updating systems, can reduce your premium.

7. Shop around

Loyalty is commendable, but comparing rates from different providers every few years is always a good idea. Market competition can lead to significant price variations for similar coverage.

8 Home insurance discounts to consider

A significant advantage of contemporary insurance is the diversity of discounts offered. Here’s a more in-depth look into how you can capitalize on these offers when insuring an older home.

1. Multi-policy bundling

Often referred to as bundling, many insurance companies provide attractive discounts when you combine home insurance with other policies like auto or life insurance.

2. Loyalty discounts

Long-term policyholders often benefit from discounts. If you’ve stuck with your insurer for several years, you might be eligible for a reduced rate.

3. Home security systems

Installing monitored security systems, smoke detectors, or sprinkler systems can lead to discounts. Insurance companies value the reduced risk associated with homes with these safety features.

4. Auto-pay and paperless billing

Some insurers offer discounts for setting up automatic payments or opting for electronic bills instead of paper, contributing to convenience and environmental conservation.

5. Claim-free discounts

If you haven’t filed any claims over a particular period, insurers may reward your claim-free status with a discount, recognizing the minimized risk you pose.

6. Senior or retiree discounts

Older homeowners, particularly those who are retired, may qualify for additional discounts, given that they often spend more time at home and can attend to potential issues faster.

7. Home improvement discounts

For older homes, roof, plumbing, or electrical system updates might qualify homeowners for discounts due to the reduced risk of damage or accidents.

8. Group affiliations

Membership in certain groups or associations, such as veterans, professional organizations, or alumni groups, may unlock special discounts.

FAQs

Is it hard to get insurance on an old house?

Insuring older homes can be challenging due to outdated materials and techniques, increased risks from aging systems, potential maintenance concerns, and high replacement costs, especially if the home has unique architectural features. 

However, it’s not impossible to get insurance. Specialized policies exist for such homes; making necessary updates can make insurance more attainable. Keeping a record of renovations and system upgrades can further aid in obtaining coverage.

What makes an old home uninsurable?

Several factors can make an old home uninsurable, or at the very least, more challenging to insure:

  • Outdated electrical and plumbing systems
  • Poor or neglected maintenance
  • The presence of hazardous materials, like asbestos or lead paint
  • Obsolete construction materials
  • Lack of up-to-date safety features
  • Previous claims or issues

What is coverage designed for older homes called?

Coverage designed specifically for older homes is often called an “HO-8” policy. An HO-8 insurance policy is tailored for older homes, particularly when the home’s replacement value exceeds its market value. 

This type of policy is typically used for homes where the architectural features or materials are harder to replace due to their unique or historic nature. 

However, it’s worth noting that HO-8 policies typically reimburse damages based on the actual cash value rather than the replacement cost, which can factor in depreciation and might not cover the full cost of a loss.

Find insurance coverage for your older home

Don’t waste time calling multiple insurers to see if they’ll insure your older home. Instead, use our online quoting tool to get several quotes in minutes.

Related content: