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Finding Homeowners Insurance for Older Homes

While older homes may have a quaint and historic charm, their hard-to-find building materials, specialized building techniques and outdated utility systems can make them challenging to insure. Due to this, older homes are often insured under a separate and more expensive type of insurance product, called an HO-8 insurance policy.

Keep reading to learn about the different insurance risks an older home poses and ways to insure them.

Which Homeowners Insurance Policy Covers Older Homes?

Home insurance for older homes is a special type of coverage, called an HO-8 policy (or modified coverage form 8). Compared to a standard home insurance (HO-3) policy, an HO-8 policy is much more limited in coverage. HO-8 policies are also more rare than standard HO-3 policies, accounting for less than 1% of all home insurance policies underwritten in 2019 according to the National Association of Insurance Commissioners (NAIC).

Below, we highlight key differences between HO-8 and HO-3 policies before discussing the different coverage options available for an older home in the next section.

 

HO-8 (Older Homes)

HO-3 (Standard)

Coverage

Limited

Basic

Common Perils Covered

10 of 16

16

Dwelling and Other Structures

Named peril

Open peril

Personal Property

Named peril

Open peril

Payout

ACV, RCV or functional replacement cost value

ACV or RCV

Best For

Older or historic homes that do not qualify for standard home insurance

Standard moderate-risk properties that most insurance companies will insure.

What Types Of Coverage Options Are There for an Older Home?

HO-8 policies offer many of the same core coverages included in a standard policy.

  • Dwelling and other structures: Insures your home’s structure, such as a fire burning down one of your home’s walls, and other structures on your property (e.g., fences, sheds).
  • Personal property: Covers your personal belongings, such as furniture and electronics.
  • Liability: Pays for legal costs, medical injuries and property damages when you can be held liable for other people’s losses.
  • Additional living expenses: Also called loss of use coverage, your daily living costs are covered if your home is inaccessible after a covered loss. For example, your hotel bills are covered if you need to stay there while your home is undergoing repairs after a fire.

Losses for older homes are generally reimbursable at functional replacement cost. Older homes are more likely to use hard-to-find building materials and techniques, which may carry higher costs if insurers attempt to cover your losses using the same materials and techniques. Instead, insurers will likely reimburse your losses based on cheaper, but still functional, materials and techniques. For example, expensive hardwood floors may be replaced with cheaper plywood.

Home insurance for older homes is a special type of coverage, called an HO-8 policy (or modified coverage form 8).

Older Homes Are Insured on a Named Peril Basis

HO-3 policies insure losses on an open peril basis but HO-8 policies insure properties only on a named peril basis. Open peril policies cover all losses except those perils specifically excluded in your policy will be covered. In contrast, named peril policies cover only the perils specifically listed in your policy.

Named peril policies offer more limited coverage than an open peril policy. An open peril policy can insure your home against more than 16 types of common perils but a named peril policy older will cover only the below 10 perils:

  • Fire or lightning
  • Windstorm or hail
  • Explosion
  • Riot or civil commotion
  • Damage by aircraft
  • Damage by vehicles
  • Smoke
  • Vandalism or malicious mischief
  • Theft
  • Volcanic eruption

HO-8 policies exclude the six perils below (but will be covered in standard HO-3 policies):

  • Falling objects (e.g., tree branch)
  • Weight of ice, sleet, snow
  • Sudden or accidental discharge or overflow of water/steam from appliances, heating or air conditioning systems
  • Sudden or accidental tears, bulges, cracks and burns of  HVAC or hot water systems or water heating appliances
  • Freezing of plumbing, heating, air conditioning and fire sprinkler systems
  • Sudden/accidental damage from power surges

Your older home will be insured against common perils, like fire, windstorms and theft but the excluded perils can be concerning. Older homes tend to have older plumbing and electrical systems. Since several types of losses related to your HVAC, electrical and plumbing systems will be excluded in an HO-8 policy, you will likely need to pay for those repairs out of pocket.

How Much Does It Cost to Insure an Older Home?

The average annual cost of a policy for an older home was $1,895 in 2019, according to a 2022 NAIC report. HO-8 policies cost 70% more than a standard home insurance policy ($1,113 per year) despite offering less coverage.

Use our table below to find the average cost of insuring an older home in your state.

State

Average Annual Premium

Alabama

$1,430

Alaska

$2,280

Arizona

$597

Arkansas

$1,787

California

$1,209

Colorado

$1,522 

Connecticut

NA

Delaware

$853

District of Columbia

NA

Florida

$2,677

Georgia

$1,430

Hawaii

1,113

Idaho

$1,339

Illinois

$1,142

Indiana

$1,183

Iowa

$1,259

Kansas

$1,844

Kentucky

$1,458

Louisiana

$1,854 

Maine

$1,015

Maryland

$1,183

Massachusetts

$1,053

Michigan

$1,436

Minnesota

$1,168

Mississippi

$1,818

Missouri

$1,451

Montana

$1,294

Nebraska

$1,896

Nevada

$590 

New Hampshire

$1,403

New Jersey

$1,485

New Mexico

$1,319

New York

$981

North Carolina

$1,122

North Dakota

$1,256

Ohio

$965

Oklahoma

$1,639

Oregon

$1,418

Pennsylvania

$1,159

Rhode Island

$1,341

South Carolina

$1,277

South Dakota

$1,395

Tennessee

$1,375

Texas

NA

Utah

$1,108

Vermont

$1,004 

Virginia

$1,009

Washington

$1,343

West Virginia

$734

Wisconsin

$1,001

Wyoming

$704

Source: National Association of Insurance Commissioners

HO-8 policies offer many of the same core coverages included in a standard policy.

Cost by Home Age

Homeowners can expect higher insurance premiums for an older single-family home than a younger one. SmartFinancial’s data showed that properties ages 50 years and older cost 14% more than a 20-year-old home.

annual average costs by home age in bar graph

Why Does It Cost More To Insure Older Homes?

Older homes pose several risks due to outdated plumbing systems and building codes, hard-to-find building materials and complicated building techniques (e.g., hand-carved crown moldings). The cost of repairing these types of losses would likely exceed the fair market value of your home. To offset these high-risk factors, insurers charge higher rates while offering less coverage.

Compare Home Insurance for Older Homes

Factors That Can Affect the Cost of Insurance for Older Homes

The property’s condition can significantly affect the cost of home insurance for an older home.

  • Home age: Older homes carry more risk, which can increase the cost of home insurance. Newer homes generally enjoy lower premiums because they are built to code and feature newer roofs and updated plumbing, electrical and HVAC systems.
  • Building materials: Older homes are more likely to use outdated or expensive building materials, such as hardwood flooring versus laminate or vinyl planks.
  • Building techniques: Historical homes may feature unique building techniques, like crown moldings and stained glass windows, that can be difficult to replace if damaged in a covered claim.
  • Home systems: Electric, plumbing and HVAC systems may need replacing after a covered loss if they were not built up to code.
  • Roofing: Older roofs may be less durable and more vulnerable to covered perils, like windstorms and fires. Insurers may even require you to replace or reinforce your roof before they insure your home.

On top of the above rating factors, insurers will also consider other factors like a standard policy, including:

  • Credit score
  • Protection class (how quickly your community will respond to fires)
  • Location
  • Claims history

HO-8 policies insure properties only on a named peril basis, which covers only the perils specifically listed in your policy.

Endorsements Worth Considering for Older Homes

Homeowners policies offer limited policies to older homes but homeowners can still purchase endorsements to increase coverage in certain areas.

Extended Replacement Cost

Extended replacement cost coverage is a purchasable endorsement that increases your dwelling coverage limits. This endorsement will cover the costs of rebuilding your home after a covered loss even if the cost of materials and labor exceeds your policy limits.

For example, say your dwelling coverage limit is $250,000 and your home is burned down. Your contractor quotes you for $300,000 to rebuild your home. Purchasing an extended replacement cost endorsement can cover the remaining $50,000.

Older homes that are more vulnerable to certain perils and expensive to rebuild can benefit from having extended replacement cost coverage.

Scheduled Property Coverage

Scheduled property coverage insures valuables that are subject to a sublimit in your policy. Sublimits operate separately from your total limit, creating a cap on how much you can be reimbursed for certain items.

For example, say your policy limit is $100,000 with a $1,500 sublimit on jewelry. Your wedding ring is worth $5,000. If you file a claim because it was stolen, you would only be reimbursed up to $1,500.

Purchasing scheduled property coverage increases the coverage limits on high-value items, such as jewelry, antiques, firearms and musical instruments. Scheduled items are also replaced at its replacement cost value and there is no deductible.

Service Line

Service line coverage insures various service lines, such as electrical wires or plumbing pipes, when they suffer a covered loss. Older homes may have outdated electrical systems and old pipes, which can make service line coverage especially useful. Service line insurance can include coverage for several types of utility lines, including:

  • Electricity
  • Gas
  • Internet
  • Sewage
  • Telephone
  • Water

Companies That Insure Older Homes

Home insurance for older homes is available from national home insurance providers, like Nationwide and Farmers. However, not all homes will qualify for coverage. If an insurance provider deems an older property too high-risk to be insured, your application will likely be denied. For this reason, people with older homes may need to spend more time shopping around before they find a carrier that will accept their application and at an affordable rate.

Insurers will likely reimburse losses on an older home based on cheaper, but still functional, materials and techniques.

Tips To Keep Homeowners Insurance Affordable

Insuring older homes may carry higher costs for less insurance coverage. Fortunately, there are several opportunities for homeowners to save money on home insurance.

  • Choose a higher deductible: A higher deductible lowers your monthly premiums (similarly, a low deductible increases your monthly premium). However, keep in mind that you will take on more financial responsibility when a covered claim needs to be filed.
  • Buy home and auto insurance from the same insurance company: Using the same insurance company to insure both your house and car can earn you a bundling discount plus a homeowners discount on your auto policy, if offered.
  • Improve your home security: Many home insurance companies offer discounts when you install security cameras, deadbolts, burglar alarms and other security devices. These safety precautions can help deter or reduce losses from theft and vandalism.
  • Reinforce your home from the weather: Reinforcing your roof and installing window storm shutters can qualify you for a roofing discount and mitigate damages to your home during a storm.
  • Improve your credit score: In some states, insurance companies use your credit score as a rating factor when calculating your insurance premium. Increasing your credit score can result in lower homeowners insurance rates over time.

FAQs

Can you be denied coverage due to the age of a home?

Yes, some homeowners insurance companies may deny coverage if a home is too old and carries too many risk factors, such as having an outdated plumbing and electrical system. Homeowners may need to do more shopping around to find a homeowners insurance company that will insure their older home.

What makes a home uninsurable?

An uninsurable home is property that the FHA refuses to insure, usually due extensive repairs and lack of durability that can increase the lender’s financial risk.

Is homeowners insurance more on older homes?

Homeowners insurance on older homes may cost less than a standard homeowners policy is often more limited in coverage. Therefore, the homeowner will likely be financially responsible for losses common to older homes, such as damages to the plumbing, HVAC and electrical systems.

Are newer houses cheaper to insure?

Newer homes are generally cheaper to insure because they are usually constructed under modern building codes and feature updated plumbing, electrical and HVAC systems.

Key Takeaways

  • Insurance companies offer HO-8 policies for older homes, which costs more and offers less coverage than a standard policy due to an older property’s higher risk.
  • Older homes are generally more expensive to insure because they may not be built according to current building codes and may use outdated or expensive building materials and techniques.
  • Homeowners insurance policies for older homes are typically named peril policies, which offer limited coverage compared to open peril policies for standard homeowners insurance.

Find homeowners insurance for your older home. Older homes that require a little more TLC can be expensive to insure but SmartFinancial can help you compare multiple insurance carriers to find the lowest price within minutes. Just enter your zip code below or call 855.214.2291 to get started on your free home insurance quotes.

Methodology

Average insurance premiums for HO-8 policies were obtained from the Dwelling, Fire, Homeowners Owner-Occupied, and Homeowners Tenant and Condominium/Cooperative Unit Owner’s Insurance Report: Data for 2019 by the National Association of Insurance Companies. Average premiums were for insurance policies with dwelling coverage ranging from $200,000 to $299,000. No data was available for Connecticut, Washington D.C. and Texas.

Average premiums by home age used 2022 internal data compiled by SmartFinancial. Sample quotes were based on single-family home policies with $250,000 in dwelling coverage.

Actual rates can vary and the data provided should be used only for comparative purposes.

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