Why Do Older Homes Need More Homeowners Insurance?
Your home may be more than 50 years old, which means more problems that come with age. There are bound to be problems that pop up left and right, especially if you’re attempting renovations on your older home. You may need more home insurance or a policy that fits the age and condition of your home. That’s why it pays to have the proper home insurance. You have a few options for covering your vintage home with home insurance.
You could purchase the most basic form of dwelling coverage, known as an HO-1. An HO-1 is simple and the least comprehensive form of home insurance. An HO-1 may be the perfect option for you if your home isn’t too old and doesn’t have any problems. However, this policy will only protect your dwelling’s structure. An HO-1 will not protect your personal property. You would have to buy supplemental insurance to protect your valuable belongings. Sadly, figuring out coverage on the most basic form can lead to more headaches for you later on.
Your mortgage lender may find the HO-1 coverage below their expectations if your home is out of shape. As a result, you may not get the financing you need. In this case, it would be time to reevaluate. You would have to choose another homeowners insurance policy.
Additionally, many insurance companies will deny coverage if there are too many issues. Why? Insurers foresee more claims in the future, based on previous claims from the past. Insurance companies won’t insure your older property until you make repairs or replacements.
Are you still considering purchasing a home? Are you in the position to negotiate with the seller? You could write concessions into the purchase contract of your home. The mortgage lender and the insurer will reevaluate and determine your eligibility. Otherwise, it would make sense to make any improvements or replacements your insurer finds necessary.
Types of Old Home Insurance
Thankfully, insurance companies have a specialized type of home insurance for older homes called an HO-8. The insurance coverage on an HO-8 only includes basic perils, like an HO-1 policy. But if your home is classified as a historic home or landmark, an HO-8 policy is the best option with the most protection.
A unique form, known as an HO-3 policy, is another standard option with the best coverage. An HO-1 policy only covers risks listed on the insurance policy, known as “named perils.” But an HO-3 policy will protect your home on an “open peril” basis. Open perils cover any danger you can think of unless otherwise listed or excluded in the policy.