Aging Gracefully: Securing Homeowners Insurance for Older Properties 

Plenty of people live in older homes. In fact, the median age of an American home is 40 years.[1] 

Older homes come with plenty of charm, and they’re often tucked into established neighborhoods with nice sidewalks, good schools, and enormous trees. However, these homes can also be very expensive to fix after a disaster. 

Some insurance companies won’t issue traditional policies for older homes. Instead, they recommend limited protection through an HO-8 plan. 

An HO-8 policy provides limited coverage for about 11 issues.[2] After a claim, you’ll only get the actual cash value of your loss—not the fees associated with replacement or rebuilding. 

Why Are Older Homes More Expensive to Insure? 

Older homes tend to be smaller than their newer counterparts. Even so, people who own these spaces often spend a lot on maintenance. On average, they spend $200 per 500 square feet on routine care annually.[3] If you have a home like this, you may be accustomed to the continual care and upkeep of an older space. 

From an insurer’s perspective, an older home comes with higher risks.[4] An old plumbing system is more likely to crack and cause flooding. Antique electrical and heating systems can cause fires too. Some companies just aren’t willing to take these higher risks, even if you’re willing to pay more to get a plan. 

In addition to higher risks, an older home can come with bigger expenses. If your walls are made of lathe and plaster, they’re more costly to repair than those made of drywall. If your windows are covered with stained glass, they’ll cost more to fix than their clear counterparts. Insurance companies may be leery of taking on these added expenses. 

How Does an HO-8 Policy Compare? 

Most homeowners have an HO-3 policy that provides significant coverage for a wide range of perils. An HO-8 policy is slightly different, as it’s made for people who have homes that have experienced a lot of depreciation and high risks. 

Three main differences set HO-3 and HO-8 policies apart. 

1. Covered Perils 

Insurance companies often list events—or perils—that they will or will not cover. An HO-8 policy includes fewer triggers.[5] This chart can explain the differences: 

	HO-3	HO-8
Fire or smoke	Covered	Covered
Wind, hail, or lightning	Covered	Covered
Electrical current damage	Covered	Not covered
Weight of ice, snow, or sleet	Covered	Not covered
Volcanic eruption	Covered	Covered
Explosion	Covered	Covered
Riot or civil commotion	Covered	Covered
Damage from aircraft or vehicles	Covered	Covered
Theft or vandalism	Covered	Covered
Falling objects	Covered	Not covered
Water or steam discharge or overflow	Covered	Not covered
Freezing of appliances or plumbing	Covered	Not covered
Flooding	Not covered	Not covered
Earthquake	Not covered	Not covered
Landslides or mudflows	Not covered	Not covered
Sewer backups	Not covered	Not covered
Maintenance or wear and tear	Not covered	Not covered
Mold	Not covered	Not covered
Insect or vermin infestation	Not covered	Not covered

Repair & Replacement Costs 

After a covered event, your insurance company responds to a claim with a payment. HO-3 and HO-8 plans handle these reimbursement issues very differently.[6] 

An HO-8 plan typically provides reimbursement for damage on a cash-value basis. You’ll get a check that represents the damage you’ve endured minus depreciation. Your policy may also set the costs based on current materials, not the antique ones inside your home. 

An HO-3 plan can provide you with checks that represent replacement costs—or the fees associated with repairing or replacing what you lost without a depreciation deduction. Some plans will even guarantee to pay whatever you need to replace or repair items so they’re just the same as they were before the event happened. 

Eligibility Requirements 

Some insurance companies won’t issue HO-8 plans for homes that are younger than 51 years.[7] They also require that the house is owner-occupied, not rented. 

An HO-3 plan rarely comes with these sorts of requirements and limits. Insurance companies may decline to cover specific houses, but they may not offer blanket restrictions that apply to everyone. 

Will Repairs Increase Your Options? 

While some insurance companies have strict rules about the age of homes they will and won’t cover, others are flexible. If you meet their conditions, you could get a less-restrictive type of coverage. 

In Florida, for example, real estate agents encourage buyers to complete an inspection and require repairs before the sale is complete.[8] Steps like replacing the roof or aging electrical system can sometimes entice companies to offer an insurance plan on a home they may have passed by previously.

California real estate agents make the same recommendations.[9] They’ve worked with clients who had to do renovations, such as updating electrical systems, to get insurance for the homes they wanted to buy. 

Repairs could help you get the coverage you want, and they could also make your home more resilient. 

How to Find Insurance for Older Properties

If you live in an older home, you may need to take a different approach to find insurance to protect your investment. 

The following steps may help:[4]

• Ask your real estate agent who offered insurance to the previous owners. 
• Ask your mortgage lender for companies that write policies in your area. 
• Reach out to your state insurance department and ask for help.[10] 

How to File a Claim 

No matter what type of insurance policy you have, the claims process is very similar. However, when you’re working with limited coverage, it’s critical to approach all of these events with care. 

When your home is damaged, read your insurance policy carefully. Look for wording that explains what type of incidents are and are not covered. You may find that a problem (like a burst pipe) isn’t covered. If so, it’s not worthwhile to file a claim. 

If the problem is covered, get a rough estimate for repairs. You don’t need to work with a contractor at this stage, but you should make a quick list of all of the supplies that you might need to fix the problem. If it fits within your budget, and the repairs cost less than you might get from insurance, a DIY approach might be best. This can prevent your premiums from going up in the future.

Learn more about how to file a claim with our detailed guide.

If you do file a claim, document the damage carefully. Know you won’t get everything back in the condition it was in before the incident happened, but you should understand what you’ve lost (including the materials they were made of). It’s always best to have more evidence than you need, so take plenty of photos and videos.

Maintain an Older Home to Reduce Risks 

As the guardian of an older home, you have a lot of power. The decisions you make, and the steps you take, can help reduce your risk of filing a claim or spending too much on insurance. 

These are good steps for a homeowner to take:

• Start with an inspection. It costs about $400 to hire a professional to examine your home.[11] This person could give you a good list of urgent risks to fix right away and long-range items to address later. 
• Make improvements when you can. People in older homes spend about $700 for each 500 square feet of space in home improvement projects.[3] When you’re writing up your yearly budget, look for places to fit in these expenses. 
• Perform routine inspections. Keep your eyes and ears open for problems like water dripping, cracks forming, or smoke building. You could catch an issue before it becomes a major problem. 
• Stay in touch. Contact your insurance company regularly and explain the improvements you’ve made. Have evidence of any changes or upgrades. You could end up with a more comprehensive policy at a lower cost. 

Protect Your Older Home 

While it’s slightly more difficult to get a policy for an older home, it’s certainly possible. Keep researching your options, and you could find a plan that’s just right for you and your situation. If you get denied, ask what you can do to improve your chances. Performing routine maintenance and improvements could ensure that your search moves smoother the following year.