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homes may have a quaint and historic charm, their hard-to-find building materials, specialized building techniques and outdated utility systems can make them challenging to insure.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.

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.

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.

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.