Insurance for buying an older home vs. a newer home | Tar Team

Why Buying an Older Home Might Mean Higher Home Insurance Costs

We really like to hear from people who want to move into Markham, Stouffville or Richmond Hill from outside the region. Not only is it nice to know that our community is in high-demand, but we know we can find just about any type of house they’re looking for.

Whether you want to move into a new subdivision, a newer, but established neighbourhood, a house with a mature landscape or even a century home, we have it all here in York Region.

But, while you might fall in love with the quaint older homes along Main Street in Unionville, buying an older home isn’t the same as buying a new home.

Buying and Older Home vs. Buying a Newer Home

Of course, there are always concerns that there may be hidden repair and maintenance requirements in older homes that can add to your buying costs. But a good home inspection should give you a clear understanding of a house’s condition and any work that’s required.

There are other pluses and minuses to buying both newer and older homes. Newer homes might come with a warranty, lower maintenance costs and more modern conveniences. Older homes might have larger yards, often be in more walkable neighbourhoods and be made with heavier, denser lumber and other construction materials.

But there is one difference between buying an older home and buying a newer one that many people don’t consider.

Home Insurance Issues that Affect Older Homes

According to the the Financial Services Commission of Ontario, there are a number of insurance coverage issues that can affect the home insurance premiums you pay for an older home.

Galvanized Steel Plumbing

Before 1950, galvanized steel plumbing was common in homes. But it has a life expectancy of only 40 to 50 years. And when it gets near the end of its lifespan, galvanized steel plumbing can rust and corrode. When it does, there’s increased risk of gradual leaks or sudden ruptures that will not only mean you need to fix the plumbing, but any water damage the leak or rupture causes to your home’s structure and/or your belongings.

Home insurance companies may require that you replace galvanized steel plumbing before they offer insurance coverage.

60-Amp Electrical Service

For homes built before 1950, 60-amp electrical service was standard. The electrical requirements of homes was much lower. Many of today’s common electrical appliances and conveniences were not very common, or even available, including TVs, air conditioners and microwave ovens.

So all today’s conveniences in an older home that still has only 60-amp service can overload and overheat the system. The result is an increased risk of electrical fires and the damage and safety concerns they can cause.

100-amp electrical service is the standard for new home construction in Ontario. If your older home has not been upgraded to 100- or 200-amp service, your home insurance company may require that it is before they give you coverage.

Knob & Tube Wiring

If the home you would like to buy is more than 50 years old, there’s a good chance it has knob and tube wiring. The Financial Service Commission says that knob and tube wiring is considered a higher risk than modern wiring for many reasons.

There is no ground wire.

They are more susceptible to wear, and exposed wires, due to their age.

If the two wires common in knob and tube wiring ever contact each other, it may cause an electrical fire.

Your house insurance policy may require that you replace all the knob and tube wiring in your home.

Wood Burning Stoves

Improper installation and usage of wood burning stoves can create a serious fire hazard. Insurance companies may require that a certified safety inspection be done before they insure your home. They may also require that your wood-burning stove and chimney be inspected annually before they renew coverage each year.

Fuel Oil Tanks

Before electrical and natural gas heat was common, most homes had a large oil tank in a corner of the basement. Home heating oil tanker trucks roamed neighbourhoods in the winter topping up the basement oil tanks as needed.

But oil tanks that are 25 years or older are susceptible to rust and corrosion. That increases the risk of a fuel oil leak and/or spill. If the leak goes unnoticed, the resulting environmental clean-up can be extensive and costly.

Most home insurance coverage will only give you coverage if fuel oil tanks are less than 25 years old and have a certified safety inspection.

If you are looking for an older home in Markham, Richmond Hill and Stouffville, it pays to shop with a real estate professional who knows the area. With more knowledge of the variety of housing, and even the characteristics of each house, you’re more likely to find exactly the house you want. Contact The Tar Team today.