Insurance Coverage Issues Affecting Older Homes
If you are looking to purchase an older home that has galvanized steel plumbing, 60-amp electrical service or knob and tube electrical wiring, be sure to factor the cost of necessary upgrades into your home buying decision, and always get a home inspection done before purchasing. You may need to make upgrades prior to an insurance company providing you with insurance coverage.
At DPM Insurance Group, our licensed brokers and CSRs can advise you on what upgrades may be needed.
Knob and tube wiring
Knob and tube wiring, commonly found in homes prior to the 1950s, consists of parallel hot (black) and neutral (white) wires, separated by knobs (or insulators) and ceramic tubes. Knob and tube wiring is considered a higher risk than contemporary wiring installations mainly because:
- There is no ground wire (in contrast to contemporary wiring).
- Given their age, the wires are highly susceptible to wearing and exposure, presenting a serious safety hazard.
- The unintentional contact of the hot and neutral wires may potentially cause an electrical fire.
As a result, you may be required to replace all exposed knob and tube wiring with approved permanent wiring material before an insurance company will provide you with home insurance coverage.
Note: Some insurers may consider covering homes with wiring issues if they are inspected by the Electrical Safety Authority (ESA) in Ontario and deemed safe. It’s best to speak to your insurance agent or broker about your specific situation.
Galvanized steel plumbing
Galvanized steel pipes, commonly installed in homes prior to 1950, have an average life expectancy of 40–50 years.
Over time, the galvanized steel pipes begin to rust or corrode from the inside out, resulting in reduced water pressure and restricted water flow. This presents an increased risk of leaks or ruptures occurring in the pipes and the potential for flood damage.
Your insurance company may require you to replace galvanized steel piping with copper and plastic piping before providing you with insurance coverage.
60-amp electrical service
Insurance companies are concerned that the 60-amp electrical service, common in homes built prior to 1950, poses the threat of overuse and overheating, potentially increasing the risk of an electrical fire and a subsequent claim.
Before providing you with insurance coverage, your insurance company may require you to upgrade your 60-amp electrical service to 100 amps (the standard for new home construction) or install a switching device that allows for the operation of only one major appliance at a time.
If your home was built between the mid 1960s and late 1970s it may have aluminum wiring. Aluminum wiring itself is safe if proper connections and terminations were made without damaging the wire, and if any devices used are approved for use with aluminum wiring. However, some homes have aluminum wiring that were not properly installed, leading to safety hazards.
Insurance companies will not provide or renew your insurance coverage if the aluminum wiring is not properly connected. You may be required to work with a certified electrician to check, repair or replace the aluminum wiring. Talk with your insurance company to learn their requirements.
Source: Financial Services Commission of Ontario