How to Insure Your Older or Historic Home
There’s something so alluring about older and historic homes—unique features, charming architecture, and the historical significance of bygone times.
Whether you bought your dream historic home to settle down and grow roots or you plan to renovate the property and flip it, you’ll need to protect it with homeowners insurance. The only catch is that historic homes are often more expensive and complicated to insure than modern homes, since insurance companies view them as a higher risk. So how can you keep your premiums low?
Stay with us as we cover everything you need to know about insurance coverage for older and historic homes—from what it costs to the type of policy you’ll need, and how you can save each month.
Why Are Historic Homes More Expensive to Insure?
Your homeowners insurance is based on your home’s replacement cost value—that’s the amount it would cost to rebuild your house from the ground up with similar building materials. Unfortunately, the cost to replace an older home is often more expensive than that of a modern home, even if they have similar market values. Here’s why.
Historic homes are typically built with hard-to-find or even obsolete building materials—think plaster walls and old-growth wood. Because these rebuild materials cost more, your insurance rates will be more expensive than a house built with more modern materials, such as sheetrock or drywall. Plus, outdated electrical systems, plumbing systems, walls and roofing may not be up to code and will require modern replacements—which add major dollar signs to a project. Older homes also feature more special features and customizations than modern homes, driving up the price of repair and replacement costs.
Finally, older and historic homes are more expensive to insure because they pose a greater liability risk for insurers. After all, these long-standing homes are more likely to be in some state of disrepair, and therefore more likely to suffer structural damage.
What Is the Average Cost of Insurance for Older Homes?
The average homeowner can expect to pay $889 per year to insure a new construction home.
By comparison, the average premium for a 30-year-old home costs about $1,432. As you can see, the cost of homeowners insurance increases quickly with the age of the home. If your home is 50+ years old, you can expect to pay as much as $1,828 each year.
Plus, if your older home is in a higher risk area like one of the states with the highest risks for wildfires, earthquakes, or flooding, your rates may be significantly higher. That’s why these averages should be used as a starting point in your search, since there are many different factors that affect how much you pay each month.
Which Homeowners Insurance Policy Do I Need for My Historic Home?
If you’re the owner of a historic home, you may need to purchase an HO-8 policy. This type of insurance is most often used if your home was built 40 years ago or longer, is a historic landmark, or is otherwise architecturally important. If your home was originally constructed using materials no longer commonly used — such as plaster walls — replacing and repairing these elements to the home’s original standard would be prohibitively expensive. An HO-8 insurance policy is designed to cover these specific circumstances.
However, it’s important to understand the limitations of this type of coverage. HO-8 policies don’t operate on replacement cost. Instead, they usually only provide actual cash value (ACV) coverage for the cost to rebuild your home. In other words, rather than paying for the entire reconstruction cost, your provider will pay out based on actual cash value, deducting for depreciation in your claim payout. This leaves you responsible to cover the remaining amount of damage.
The HO-8 home insurance policy only protects your home and its contents against the most common perils. For example, HO-8 policies exclude coverage for falling objects, the weight of snow and frozen pipes.
HO-8 policies cover losses caused by the following 10 named perils:
- Aircraft
- Civil unrest and riots
- Explosions
- Hailstorms and windstorms
- Lightning and fire
- Smoke
- Theft
- Vandalism and malicious mischief
- Vehicles
- Volcanic eruptions
Although HO-8 policies cover fewer perils and include lower dwelling coverage limits, they typically cost less than a traditional homeowners insurance policy would for a historic home. As a general rule, if it costs more to repair your damaged home than the home’s current market value, an HO-8 policy will likely be your most affordable option.
How to Lower Home Insurance Rates for Your Historic Home
Even though you’ll still pay higher insurance rates as the owner of a historic home, there are still plenty of ways to drop your monthly costs. Here are some helpful tips:
- Modernize your home: Want to make your home more safe, efficient, and affordable without losing any of its unique architectural charm? It’s as easy as replacing your home’s outdated systems:
- Upgrade your electrical from aluminum or knob-and-tube wiring to copper
- Replace your old pipes
- Swap out your outdated HVAC system for an energy-efficient alternative
- Increase your deductible: Your home insurance deductible is the out-of-pocket cost you have to pay when you file a claim before your insurance company kicks in to cover the rest. Therefore, if you want lower rates, simply raise your deductible to a level that feels financially comfortable.
- Choose a provider that offers plenty of discounts: Home insurers offer generous discounts, including savings for:
- Paying your premiums in full
- Having a high credit score
- Installing select safety devices throughout your home
- Not smoking
- Being married
- Bundle your home and car insurance: Combining your policies with one provider is one of the easiest ways to save you money—with no effort required!
Looking for Affordable Homeowners Insurance? Look No Further
Now that you know how to keep your historic home protected with insurance, it’s time to find a provider and policy that will give you the best rates possible. We’re here to make the hunt for coverage easier than ever with our fast and affordable online home insurance quotes. Get your free quote today and rest easy knowing that your home is protected when you need it most.
