Older homes typically cost more to insure than new homes because of their increased claims risk. According to research by Insurify, the average annual premium for a $300,000 policy for a home built in the 1940s is $2,385 — slightly higher than the national average of $2,377.
Comparing home insurance quotes is essential to finding coverage for your older home. Here’s what you need to know about getting cheaper insurance for an older home, and what to do if you can’t find coverage.
Home insurance costs for older homes are typically higher than for newer homes. The table below illustrates the cheapest and best homeowners insurance companies for a $300,000 policy.
Homeowners insurance for older homes typically results in higher premiums. Fortunately, you can lower your costs in several ways, including:2
Seek discounts. Save money on your policy by checking your insurer’s website for home insurance discounts you qualify for.
Fortify your home. Qualify for a discount by installing a security system or safety features, weatherproofing your home, and reinforcing its structure.
Bundle policies. Take advantage of your company’s multi-policy discount for better auto and home insurance rates.
Improve your credit score. Insurers use your credit-based insurance score to determine premiums. People with higher credit scores have a lower risk of filing claims, so they pay lower rates.
Compare home insurance quotes. Find the best deal on the coverages you need using an online quote-comparison tool to see how different insurance companies stack up.
Old homes have a higher risk of a covered loss. So, insurance companies evaluate the age of your home to determine your likelihood of filing a claim. For example, aluminum electrical wiring, commonly installed in homes built in the 1960s and ’70s, poses a higher fire risk, increasing insurance premiums.
Here’s another example: Homes with older roofs have an increased risk of damage due to severe weather or natural disasters.3 So, you can expect your insurance rates to rise with an aging roof.
Many factors influence the cost of your home insurance policy, including:
Follow these steps to find insurance for an older home:
Comparison shop. The best way to find the coverage you need at the lowest price is by comparison shopping. Research companies that offer your required coverage. It may help to look into insurers that specialize in insurance for older houses. In addition, review each company’s customer service ratings, financial strength ratings, and user-generated reviews to gauge its reputation.
Get quotes. Once you’ve decided on companies to compare, get quotes from at least three. An online quote-comparison tool can expedite the process. You can also speak to an independent insurance agent who can provide objective recommendations based on your needs. Ensure the coverages are similar across the board for the most accurate comparison.
Purchase a policy. After finding the best rates, purchase your policy. You may have to speak to an insurance representative over the phone to finalize your coverage.
If a standard HO-3 insurance policy doesn’t cover your older home, an HO-8 policy might. HO-8 policies cover older homes where the replacement cost exceeds the market value. This policy covers dwellings, other structures, and personal property.
One downside is that your coverage limit equals your home’s actual cash value (ACV), which is its replacement cost minus depreciation.5 So, if you have an older home, depreciation likely affects how much coverage you get.
Various types of coverage for older homes are available. Understanding each type can help you choose one that fits your needs.
An HO-3 policy, also known as special form coverage, is the most common type of homeowners insurance. It provides insurance coverage for your dwelling and other structures on an open peril basis, meaning it covers all risks besides ones explicitly excluded.
While it provides broad protection for your dwelling, HO-3 only covers the 16 named perils up to the ACV of your personal property.
HO-8 insurance, a modified form policy, is for older homes not qualifying for a standard policy. It only covers damages caused by named perils to your dwelling, other structures, and personal property up to its ACV.
One thing to note is that this coverage includes the cost of dwelling repairs and replacement using modern materials and methods, making your insurance more feasible and less costly.
Outdated plumbing systems in an older home increase the risk of water backup due to inefficiency or deteriorated condition. Standard HO-3 policies exclude water backup, so you must purchase an endorsement or policy add-on.
This coverage pays for water damage to your sewer, drainage, or sump pump systems. Since it increases your policy’s coverage, you’ll have to pay an extra premium.
Like plumbing systems, utility lines (lines that run from your street to your home, such as pipes, cables, and wires) are more prone to damage in an older home. Adding service line coverage protects buried service lines from damage. But it typically comes as an endorsement, so you’ll likely pay an extra premium.
Replacement cost coverage replaces your damaged property with materials of “like kind and quality” without deducting depreciation. Standard insurance policies cover the replacement cost for your dwelling and other structures but not your home’s contents.
While it offers more protection than an actual cash value (ACV) policy, replacement cost coverage comes at a higher price. In addition, replacement cost coverage may not cover the entire cost of rebuilding your home. For example, increased material and labor costs or changing building codes may mean your home’s replacement value exceeds your policy’s coverage limit.
To protect yourself, you can consider purchasing an extended replacement cost policy — with this policy, an insurer will pay a certain percentage over your coverage limit to rebuild your home. But this type of policy may not be available for older homes.
The cost to rebuild or repair an older home to comply with current building codes is likely higher than its replacement value. This endorsement provides additional coverage to meet updated building codes, ordinances, and laws, lowering out-of-pocket costs. Since it’s an endorsement, you have to pay an increased premium.
Standard home insurance policies offer protection for personal property on a named peril basis up to its ACV. But you may need more insurance if your older home has high-value items like jewelry, antiques, art, and collectibles. This is where scheduled personal property coverage comes in handy. This add-on typically covers your expensive personal belongings up to their replacement cost with broader peril coverage.
Since it’s an endorsement, expect your premiums to increase. Plus, it may require a yearly appraisal to ensure your coverage stays up to date.6
Finding home insurance for an older home can be challenging. Below is some additional information to help you with your search.
Homeowners insurance is more expensive for older homes because of its increased risk level. One of the best ways to lower your cost is by comparing quotes from insurers that offer the coverages you need.
Westfield offers the cheapest price for older homes, at $1,038 per year, or $127 per month, for a $300,000 policy. Your rates will vary based on your ZIP code, home age, and replacement cost.
An HO-8 policy insures older homes excluded from a standard HO-3 insurance policy. It covers up to the ACV of your dwelling and personal property on a named-peril basis.
Insurance for older homes offers dwelling coverage, other structures coverage, and personal property coverage. It also offers personal liability and, in most cases, loss of use coverage. The extent of your coverage depends on the type of policy and insurance company.
Yes. Older homes tend to have more issues that increase their risk levels. If you can’t get coverage through a traditional insurer, consider looking at your state’s FAIR plans. This state-managed program helps homeowners secure insurance for high-risk homes.
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