When it comes to finding your dream home, innumerable factors come together to make it “just right.”
There’s the oft-cited location, certainly, as well as the overall look of the home, the number of bedrooms and bathrooms, the size and direction of the garden, and too many more details to list.
When it comes to insurance coverage, however, some features are more important than others.
“The older houses are different because of the new building codes and the whole goal (of the insurance industry) is to prevent losses,” notes Gary Law, with SeaFirst Insurance in Athlone Court.
That means prospective buyers may find certain houses challenging to insure, unless they’re willing to address the underlying concerns.
Here in Oak Bay, where many homes date from the early 1900s, knob and tube wiring commonly used in the houses through the 1920s and ‘30s is becoming problematic for home insurers, Law says.
Because the old wiring was not designed to accommodate today’s electrical load, it can create a fire risk. Even if a renovation has updated wiring in part of the house – like the kitchen, typically – knob and tube in other areas may create a risk some insurers are simply not willing to cover, Law says. Others will provide temporary coverage while the new homeowners replace the outdated wiring.
“The insurance industry is really taking a hard stance. Where the knob and tube wiring is is important and the condition of it.”
Because this may be outside the scope of a building inspector, buyers may need an electrical inspection as well.
Other issues can arise with renovations done over the years – wiring in the 1970s may not be compatible with today’s fixtures, for example. “The age of the home is really important,” Law says.
As for renovations, “What was done, when was it done and how was it done?”
Buried oil tanks can present another red flag for insurers, Law says.
Because insurance is designed to cover sudden, accidental issues, and because it covers buildings – not land – insurance does not cover the resulting contamination from a leaking oil tank.
That doesn’t prevent policy holders – or neighbours – from trying to claim compensation, however, and to avoid potentially costly disputes, the answer from most insurance companies is simply “No,” he says.
That means home buyers – or sellers – may need to investigate further as to possible contamination and the costs of clean-up and tank removal.
By and large, however, the greatest number of claims Law sees today come not from fire but from water. “Water damage is No. 1,” he says.
Back when few homes populated the municipality, drain tiles were sometimes seen as unnecessary.
In other cases, the drainage system, including gutters and downspouts, haven’t been maintained properly. With more homes creating pressure on the sewer systems, the consequence can be water back-up or flooding.
Other issues can arise with the old cast-iron pipes that can rust or from a leaking hot water tank that has out-lived its projected 10- to 15-year lifespan, Law says.
And, since more people are finding more livable space by finishing their basements, insurance costs are higher when water leaks happen.
Failed waterproofing membrane around the foundation of an older home can also present a challenge for insurers as it represents a long-standing problem – not the sudden and accidental mishap insurance typically covers.
“How did the water come into your house? That’s the key to the claim,” Law says.
The bottom line is to sit down with your broker to find the right insurance fit for your prospective home and your needs. All policies are different and individual brokers will have different products.
“Talk to your broker and get educated about what you’re purchasing,” Law says. “Make sure you understand the product you’re buying.”