Issues with Old Homes

Homes make up one of the largest types of coverage provided by insurance companies in the U.S. Per recent U.S. Census Bureau figures (as of 2013), the age composition of owner-occupied homes breaks down as follows:

2010 – 2013:           2%

2000 – 2009:           15%

1990 – 1999:           14%

1980 – 1989:           12%

1970 – 1979:           17%

1969 & earlier:         40%

The median age of such homes is 37 years. Average home age differs considerably across the U.S. with the lowest average age in the West and the highest in the Northeast. Older homes are, for the most part, readily insurable. However, significantly aged homes, say 70 years or older, can create issues for insurers. 

Really old homes (antiques, built 1920 or earlier) have architectural features that are very difficult and costly to repair. This may make it necessary to get insurance coverage on a different claims settlement basis, such as functional or repair cost protection. The result is that owners of older homes must bear more of the risk and expense of losses that occur.

When dealing with older homes, there are a variety of problems, such as the following:

  1. May contain hazardous materials such as lead in paint or asbestos flooring or insulation.
  2. Possibility of insect damage such as termites; older, wooden structure in southern part of the country are more vulnerable as insect activity occurs year-round.
  3. Mold and Mildew Damage due to older homes being exposed longer to the effects of moisture, including from older plumbing fixtures.
  4. Plumbing Problems- significant damage can occur if a plumbing system is aged, making leaks and burst pipes possible due to clogs, deterioration and root damage.
  5. Foundation or Structural Problems - A variety of problems can occur due to deterioration, shifting and settling. Cracked foundations, floors, walls and damage to home openings become common and ineligible for coverage.
  6. Roof Problems - Older homes can often have old, deteriorating roofs. Such roofs may suffer from water damage, damage to insulation and drywall and even vermin infestation. All are ineligible for coverage as they are maintenance issues.
  7. Inefficient Windows – These are endemic to older homes, creating huge bills due to air leaks.
  8. Electrical Systems – Older homes face significantly higher exposure to loss caused by obsolete electrical systems, such as increased fire hazard from exposed wires or circuits that may blow or overheat.
  9. Failing or Inefficient Mechanicals and Appliances – these can present higher likelihood of interior flooding from burst appliance connections or winter pipe freezing because of furnace failure and other problems.
  10. Outdated Updates or Features – may exist in older homes due to actions of multiple, previous owners. Older homes may have physical features such as uneven flooring, unusual entries or stairs or partial walls and off-centered supports. These could lead to increased hazards to residents and visitors if uncorrected.

Please refer to our discussion, “Functionally Valuing Older Business Property” for more information.

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