Insuring Your Historic or Antique Home
If you own a historic home, don’t assume that all homeowner’s insurance policies are the same. You may be disappointed should you need to file a claim. Does replacement cost coverage on your policy include actual replication of significant historic details such as moldings and other period elements? Does your coverage allow the insurer to pay for the replacement of an 18th century window with only a modern premanufactured window of similar size and appearance? This will be unsatisfactory if you’re expecting an accurate replica.
Buying a homeowner insurance policy may seem easy. Finding the right coverage for your antique home, however, requires a little effort. To avoid disappointment, and potential financial stress, make time to learn about the important coverages in your homeowner’s insurance. Let’s start by reviewing some features of homeowners’ policies and how companies may respond when insuring antique and historic homes.
Replacement Cost and Market Value
First, a quick review of replacement cost versus market value. Older homes are often purchased at values significantly lower than the cost to rebuild them. Replacement cost is an insurance term. It’s important to insure your home for its replacement cost value, not the purchase price, or market value. Antique and historic homes often contain features that are not easily or inexpensively replicated. These may include plaster walls, wide pine wood floors, and extensive interior detailing. The actual cost to rebuild the home can greatly exceed the purchase price or market value.
Guaranteed Replacement Cost and Extended Replacement Cost
These coverages are found in most homeowner’s policies. Guaranteed replacement cost coverage guarantees that your insurance company will pay the reasonable cost to rebuild your home after a covered loss, even if the cost exceeds your coverage amount. For example, if your house is insured for $500,000 and the actual cost to rebuild it is $575,000, then your insurance company would pay $575,000. Some insurance companies, instead, offer extended replacement cost coverage. This caps the coverage at, for example, 120% of your limit. In this example, your house is insured for $500,000, and the cost to rebuild it is $675,000. A policy with a 120% cap would only pay $600,000, leaving you with $75,000 in additional rebuilding expenses. With an inadequate amount of coverage, the result could be a significant financial shortfall at the time of a total loss.
Home Appraisals and Selecting the Right Amount of Coverage
As the owner of an antique home, you may ask: “How do I know how much it would cost to rebuild my house?” There are still some companies that leave it up to the customer to determine an accurate replacement cost.
Owners of antique homes are best served by companies that offer, or even require, a home appraisal. Some carriers may perform an exterior appraisal. Typically, exterior only appraisals are not adequate for older homes. When appraisers do not review the interiors of older homes, they cannot properly assess the replacement cost value. Fortunately, there are insurance carriers that offer expert appraisal services for older homes.
Companies that specialize in high-end and antique homes employ specifically trained appraisers. These appraisers conduct thorough interior and exterior inspections. They carefully record the construction details of the home. With superior information, these companies provide replacement cost estimates with confidence, which then enables them to offer extended or replacement cost coverage. The company has the burden of accurately determining the replacement value of the home. You have peace of mind and know your home will be rebuilt, regardless of the coverage amount.
Rebuilding to Code
(Ordinance and Law) Coverage
An essential coverage for owners of antique and older homes is “rebuilding to code” coverage. Known as ordinance or law, this coverage helps protect against the cost of conforming to building codes that regulate the repair and/or rebuilding of your home after a loss. Many towns and counties enforce building codes that affect various aspects of home building and repair. These include electrical wiring, plumbing systems, and fire codes. For example, if you need to repair or rebuild your antique home after a loss, local building codes may require you to rewire your entire electrical system, or even widen stairways and hallways, to improve fire safety. If your insurance policy does not include rebuilding to code coverage, you will have to pay for these upgrades and changes.
Some carriers may not offer this coverage, while others offer it by endorsement. Premier carriers, however, are likely to include it automatically. Check your policy carefully. Ideally you would purchase homeowner’s insurance that includes rebuilding to code coverage on a replacement cost basis. If you choose a standard insurance policy and purchase rebuilding to code coverage by endorsement, make sure that the endorsement provides coverage on a replacement cost basis, for 100% of the coverage amount.
For Additional Information
Like many antique homeowners, you likely devote much of your time, money and hard work to your home. We encourage you to also invest some time into obtaining suitable insurance. Homeowner’s insurance policies are not all alike. Coverages are not the same from one policy to another. Consult with a knowledgeable agent advisor, with experience and access, to secure the best protection for your home.