For most homeowners, insuring their home is straightforward. However, not all homes or homeowners are easy to insure. Here are some of the reasons a home may be hard to insure:
- Multiple claims
- A history of non-payment
- First-time homeowners
- Gap in insurance coverage
- Multiple or private mortgages
- Home-sharing or short-term rentals
- Older homes requiring updates
- Certain types of plumbing
- Certain types of electrical wiring
- Certain types of heating
This article will discuss why these homes are considered hard to insure or hard to place and what you can do about it.
Multiple Claims
If you have multiple claims on your home, you may find it difficult to get home insurance. This is because insurance companies consider your home “risky” and likely to have another claim.
Many insurers will not insure your home if it has an open claim, so make sure all outstanding claims are resolved before you go home insurance shopping.
Expect to pay higher premiums and potentially have limited coverage for your home if you’ve had multiple claims, especially if they are large and recent.
History of Non-Payment
If you have a history of not paying your insurance premiums, you will likely find it difficult to insure your home. Some insurance companies will not insure anyone who has had a policy cancelled for non-payment while other insurers are more flexible. You will likely have limited payment options and be asked about why you were unable to pay.
Demonstrating that you will pay your bills by improving your credit and continuing to pay all insurance-related bills on time can help.
First-Time Homeowners
Unfortunately, first-time homeowners may find it tough to insure their new home. Some insurers may view them as riskier to insure as they may not have any insurance history and they may be statistically most likely to miss a payment or to have a claim.
However, there are other insurers that have no issue with first-time homeowners. Our best advice is to shop around – or use a broker to take care of that for you.
Gap in Insurance Coverage
If someone hasn’t had home insurance for a period of time, this is known as a gap in insurance coverage. Insurance companies may consider someone with a gap in coverage as riskier to insure. The longer the gap, the more likely there will be issues obtaining home insurance.
Generally, you simply need to shop around to find an insurer who isn’t as concerned about your gap in coverage. You’ll likely be asked why you haven’t had coverage but if the explanation is reasonable there shouldn’t be a problem.
Multiple or Private Mortgages
Many home insurance companies won’t write homes with multiple mortgages or those mortgaged privately. Multiple mortgages can be an indicator of financial issues or problems with a home. Private mortgages are simply viewed with more suspicion by the insurance industry, as these agreements can be very loose and unofficial. Traditional lenders like banks and credit unions are preferred.
However, if you do have multiple mortgages or a private mortgage, you may be able to find home insurance. It will likely depend on your circumstances. You will be asked why you have multiple mortgages or a private mortgage, how much the home is mortgaged for, and the current market value of your home.
Home-Sharing and Short-Term Rentals
Some home insurance companies don’t cover you for damage caused by home-sharing or short-term rental tenants or will not insure you at all if you participate in either activity. Luckily, some insurance companies are happy to cover these risks, you just have to shop around. Usually, coverage is found as a specific home-sharing or short-term rental endorsement. You may even be able to get coverage for lost booking revenue!
Keep in mind that most home insurers offering this coverage will only cover you if you use a home-sharing service like AirBnb or VRBO and live on the property. If you own a property exclusively for home-sharing or short-term rentals and do not live there, you will need commercial insurance.
Older Homes
The older the home, the more likely it is to be harder to insure. This is especially true if the home is over 25 years old and has not been updated. Older homes are considered riskier by insurers as age contributes to wear of materials and many things used in home construction in the past are now known to be dangerous, unsafe or non-compliant with current bylaws.
There is no exact definition of an older home except by age. Home insurers will generally look at the age of the home and the condition of the:
- Roof
- Plumbing
- Heating
- Electrical system
They’ll want to know if any areas of the home have been updated and how they’ve been maintained. They will likely require an inspection, especially if the home is over 50 years old or has not been updated.
Insuring an older home can be more of a process but it may be possible. Working with one of our experienced home insurance brokers can help make it easier.
Plumbing
Homes with certain types of plumbing systems may be harder to insure due to the high likelihood of claims. Three examples are galvanized plumbing, Kitec plumbing, and Polybutylene plumbing.
Galvanized plumbing is where steel pipes have been coated with zinc to prevent rust and corrosion so they can be used for plumbing. This was most common between 1945 to 1960. Unfortunately, these pipes corrode and rust on the inside, resulting in lead in water and weakened piping.
Kitec was a cheaper and easy-to-install plumbing pipe used between 1995 and 2007. It is flexible aluminum pipe with an inner and outer layer of plastic pipe with brass fittings. Unfortunately, these pipes are prone to spontaneously burst as well as have mold and mildew issues. This obviously comes with high repair costs.
Polybutylene plumbing was used in homes from the 1970s to 1990s. Unfortunately, chlorinated water causes this type of plumbing to deteriorate, especially at areas of stress such as fittings, sharp bends and kinks.
If your home has one of these types of plumbing, you will likely find it difficult to insure. Unfortunately, your options are limited and you may have to have a plumbing exclusion on your home to get coverage. This means damage caused by your plumbing system isn’t covered.
We recommend people invest in updating their plumbing if possible. This will not only make getting home insurance easier and more affordable, it will also make your home safer.
Electrical Wiring
If your home has a certain type of electrical wiring, you may find it hard to insure. This includes knob and tube wiring, aluminum wiring, and 60 amp serviced homes. These homes are harder to insure as these electrical systems are considered more likely to cause fires or have other issues resulting in claims.
Knob and tube wiring are open electrical wire systems. They were primarily used between 1900 and the 1940s, but they can be found in homes built as late as 1970. These systems are considered risky as they were designed to be more open but insulation and changes to the walls can cause a fire risk. We also place a greater electrical demand on these wires than they were designed for.
You may be able to get coverage for a home with knob and tube wiring, but there may be limitations on where the wiring is used. You may also be required to have an electrical inspection to ensure the knob and tube wiring is safe and setup correctly.
Aluminum wiring is considered to be a high fire risk due to aluminum’s expansion when heated, softness (it’s easily damaged which can create hot spots), and potential for rusting. You may be able to get coverage for homes with aluminum wiring but there may be limitations and you’ll likely need an electrical inspection.
60-amp service is found in homes built in the 1940s until the 1990s. It’s simply an amount of power available for the home. Our electrical demand has changed a lot since the 1940s, so most new homes have 100-amp service. Some insurers do not want to insure 60-amp service homes as they’re not designed for the electrical demand today.
It is possible to insure a 60-amp service home. It will depend on the square footage of the home, how many major appliances are electric, and the individual insurance company’s practices. You may be charged higher rates if you have 60-amp service.
We do recommend you update these electrical systems to ensure you have the safest wiring possible for your home. However, that’s not always an option due to expense. It is important to note that if your home does not pass an electrical inspection you will likely be unable to get home insurance.
Heating
If you have an older heating system or a wood burning appliance, you may find it difficult to insure your home. Heating appliances can have a high fire risk and if it’s older, it may fail and cause other claims like a burst pipe.
If your heating system is older, you may need to prove it’s been maintained each year or get an inspection before you can get home insurance.
Wood burning stoves and other appliances may also be difficult to insure given their high fire risk. Some insurance companies will insure homes with wood burning appliances, but may require photos and a Wood Energy Technology Transfer (WETT) inspection. You’re more likely to get insured if the wood-burning appliance isn’t your primary heating source.
How to Protect Hard to Insure Homes
If you have a hard to insure home, it may be worth it to invest in updating the home so that it is more easily insurable. In some cases, you will not be able to get coverage until this is done. It will also generally make your home safer. However, this is not always feasible or even necessary.
In some cases, you may pay higher premiums, have a higher deductible, or have limited coverage for a hard to insure home.
A broker can help you navigate this process and help get you the best coverage for the best possible price.
