Historic Homes and Modern Insurance

By Arthur Murray

Many people who buy historic homes — from bare-bones colonials to elaborate Victorians — are drawn to them, at least in part, because they want to return to simpler times. Unfortunately, buying home insurance for these houses can be complicated. They may be high-value, hard to repair or rebuild, or difficult to appraise.

Complicated, however, doesn’t mean impossible. Consider the following factors as you seek homeowners insurance quotes for your historic home.

It matters when your home was built

Historic homes often fall into two categories: houses built prior to 1945 and those built before 1900.

If the home was built before 1945, it’s possible that it could be protected with a standard homeowners insurance policy — with a few tweaks. This is especially true if the electrical and plumbing systems have been replaced and a modern HVAC system has been installed.

If the home was constructed before 1900, however, there’s a larger chance it includes unique architecture, unusual features and building materials that were common then but not widely used now. None of this means you won’t be able to insure it, but you may need to search for an insurance provider that specializes in historic homes coverage.

Determining the replacement value

One of the major sticking points in insuring a historic home — regardless of which era it was built in — is determining its replacement cost. With modern homes, providers start by multiplying the square footage of the home by local building costs and then add the cost of upgrades such as granite countertops and hardwood floors.

With historic homes, providers usually assign appraisers and restoration experts to evaluate the home before they issue a policy. That’s because of the difficulty in rebuilding it with the same features and materials. Because of this factor, the replacement cost of your historic home could greatly exceed the amount you paid for it — and the replacement cost is the amount for which you’ll need to insure it.

Finally, you should also consult a licensed agent to determine whether you need to add Ordinance and Law Coverage to your policy. This helps you by providing additional costs required to rebuild your historic home to local building codes and other laws. For example, your city’s building code could require you to widen stairs or rewire the electrical system. If you don’t have this coverage, you could have to pay the extra expense on your own.

What’s in the home?

Standard home insurance typically includes contents coverage for your personal possessions inside the home, including furniture, electronics and other items. The amount of coverage for these possessions typically is 5o to 70 percent of the replacement cost of the house. However, payouts for high-value items can be limited.

That’s important because most historic homes also contain antique furnishings and sometimes expensive artwork. These items may not be covered unless you schedule an endorsement — an addition to the policy specifically covering those items.

How to reduce what you pay for coverage

All these requirements can drive up the cost of coverage. Historic home coverage typically costs about 20 percent more than standard coverage. But there are steps you can take to reduce your premium.

One is to introduce modern safety features such as smoke detectors and sprinkler systems. They could earn you discounts on premiums.

Another tactic to consider is increasing your deductible. As the amount you agree to pay toward a claim increases, your premium will decrease. Be careful, however, to keep your deductible at an amount you can afford to pay. You won’t get help on a claim until you meet it.

Historic homes are attractive to many people. If the home is on the National Register of Historic Places, you can often get grants and tax breaks for restoring or maintaining it. State and local designations can help preserve whole neighborhoods. But understand before you get in too deep that historic homes also come with complications. Make sure you’re ready to take them on.

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Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

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