How to Insure Your Older or Historic Home

There's something enticing about older and historic homes: unique features, charming architecture, and historical significance.

Whether you bought your dream historic home to settle down and grow roots in, or you intend to renovate and flip it, you'll need homeowners insurance to protect it. The only catch is that historic homes are frequently more expensive and difficult to insure than modern homes because insurance companies consider them to be a higher risk. So, how do you keep your insurance premiums low?

Stay with us as we go over everything you need to know about insurance for older and historic homes, from how much it costs to what kind of policy you'll need and how you can save money each month.

Why Are Historic Homes More Expensive to Insure?

Your homeowners insurance is based on the replacement cost value of your home—the amount it would cost to rebuild your home from the ground up using comparable building materials. Unfortunately, even if their market values are comparable, the cost of replacing an older home is frequently higher than that of a modern home. This is why.

Historic homes are often constructed with difficult-to-find or even obsolete building materials, such as plaster walls and old-growth wood. Because these rebuild materials are more expensive, your insurance rates will be higher than if you built a house with more modern materials, such as sheetrock or drywall. Furthermore, outdated electrical systems, plumbing systems, walls, and roofing may not be up to code and will necessitate modern replacements, which will add significant cost to a project. Older homes also have more special features and customizations than newer homes, which raises the cost of repair and replacement.

Finally, older and historic homes are more expensive to insure because insurers face a higher liability risk. After all, these older homes are more likely to be in disrepair and thus more likely to sustain structural damage.

What Is the Average Cost of Insurance for Older Homes?

A new construction home will cost the average homeowner $889 per year to insure.

In comparison, the typical premium for a 30-year-old home is around $1,432. As you can see, the cost of homeowners insurance rises rapidly as the age of the home increases. You can expect to pay up to $1,828 per year if your home is more than 50 years old.

Furthermore, if your older home is in a high-risk area, such as one of the states with the highest wildfire, earthquake, or flooding risks, your rates may be significantly higher. Because there are numerous factors that influence how much you pay each month, these averages should only be used as a starting point in your search.

Which Homeowners Insurance Policy Do I Need for My Historic Home?

If you own a historic home, you may be required to purchase a HO-8 policy. This type of insurance is typically used if your home was built 40 years or more ago, is a historic landmark, or is otherwise architecturally significant. If your home was built with materials that are no longer widely used, such as plaster walls, replacing and repairing these elements to the original standard would be prohibitively expensive. An HO-8 insurance policy is designed to protect you in these situations.

It is, however, critical to understand the limitations of this type of coverage. HO-8 policies are not based on replacement cost. In most cases, they only provide actual cash value (ACV) coverage for the cost of rebuilding your home. In other words, rather than paying for the entire cost of reconstruction, your provider will pay out based on actual cash value, with depreciation deducted from your claim payout. This makes you liable for the remaining amount of damage.

The HO-8 home insurance policy only covers the most common perils to your home and its contents. For example, HO-8 policies do not cover falling objects, snow weight, or frozen pipes.

HO-8 policies cover losses caused by the ten named perils listed below:

  • Aircraft
  • Civil unrest and riots
  • Explosions
  • Hailstorms and windstorms
  • Lightning and fire
  • Smoke
  • Theft
  • Vandalism and malicious mischief
  • Vehicles
  • Volcanic eruptions

HO-8 policies typically cost less than a traditional homeowners insurance policy for a historic home because they cover fewer perils and have lower dwelling coverage limits. In general, if the cost of repairing your damaged home exceeds the home's current market value, a HO-8 policy will be your most cost-effective option.

How to Lower Home Insurance Rates for Your Historic Home

Even though you will continue to pay higher insurance rates as the owner of a historic home, there are numerous ways to reduce your monthly costs. Here are some pointers:

  • Modernize your living space: Want to make your home more secure, efficient, and cost-effective while retaining its unique architectural charm? It's as simple as replacing your home's old systems:
    • Upgrade your electrical wiring from aluminum or knob-and-tube to copper.
    • Replace your worn-out pipes.
    • Replace your old HVAC system with a more energy-efficient model.
  • Increase your deductible: Your home insurance deductible is the amount you must pay out of pocket when filing a claim before your insurance company will cover the rest. As a result, if you want lower rates, simply increase your deductible to a level that is financially comfortable for you.
  • Choose a provider that provides numerous discounts: Home insurance companies provide generous discounts, including savings for:
    • Paying your premiums in full
    • Having a high credit score
    • Installing select safety devices throughout your home
    • Not smoking
    • Being married
  • Bundle your home and car insurance: Combining your policies with one provider is one of the simplest ways to save money—and it requires no effort!