Our agency writes a lot of home insurance business throughout the state of Florida. And although Florida has many of its own issues when it comes to insurance, the problems multiply when you invest in an older home. Collectively our agents have seen most major issues when it comes to purchasing an older home or having work done on an older home. A few examples are a handyman who thought he was a plumber and caused a $250,000 water damage claim, a new purchase that needed a new roof under contract before the closing (not always a fun proposition to lay out the money for a new roof before you own the place), a new home that was unknowingly purchased with toxic mold growing behind the walls, and most recently we have experience the two most common older home plumbing issues: 1) Backed-Up Sewer Lines and 2) Galvanized plumbing.
According to Jim Mallery, a former contractor and journalist for The Old House Web, the top two reasons to replace plumbing in older homes is because of 1) Old Sewage Lines and 2) Galvanized Pipes. It is no big surprise that most insurance carriers will not offer much coverage for ‘Water Back-Up’ which covers you in the event that your sewer lines back-up into the home, and if they do offer this coverage it is typically capped at $5,000 in coverage. Also, most insurance companies refuse to write policies for homes that have galvanized pipes.
Mallery explains that the reasons for these plumbing issues is because older sewage lines simply fail over time regardless of the material. Plastic cracks, metal corrodes, paper is not reliable, and everything can get clogged or crushed. In the insurance companies eyes this is typically considered ‘wear and tear’ which is not covered under an insurance policy. Furthermore, Mallery discusses the other pitfall: galvanized piping. Galvanized pipes are more likely to corrode (especially when you are looking at 50 or more years of use). In fact, according to Master Plumber Tim Carter, from Ask the Builder, galvanized pipes are a technology from over 100 years ago, and as galvanized iron water pipes age, mineral deposits form on the interior of the pipe. This is exacerbated by higher temperatures in the hot water lines. The end result is plumbing lines that allow very little water flow and eventually begin to leak. Insurance companies do not like leaky pipes, or even the potentially leaky pipe (remember the $250,000 water damage claim I mentioned earlier).
The bottom line when it comes older homes is there is a higher probability for a claim than with a newer home (especially when looking at major systems like plumbing systems, roofing systems, electrical systems, and HVAC systems). And with a higher probability the underwriters at the insurance company assign a higher rate for the policy. In the end that translates to a higher premium for the consumer, or worse a disqualification for coverage. There is always a solutions. Whether it be to replace the problematic system with a newer one, pay the higher premiums, or lower coverage elsewhere to keep the insurance costs within your budget we can help.