What’s not to love about an older home? Not only does it come with a sense of history, it also has its own unique and quirky charm. With that history can come a long list of upgrades and renovations you’ll need to tackle – both to pretty it up and to bring it up to current building standards.

It’s easy get caught up in all the remodeling, budgeting, and décor decisions that are needed when you’re moving into a fixer upper. But, it’s also super important to pull your home insurance into your planning. Many Canadians don’t know how insurance works for an older house, or how renovations can affect home insurance premiums. We want to help you make sure your older home is protected before, during, and after renovations.

How can an older home affect my home insurance?

Okay, so maybe some of the features on your Victorian dream home have seen better days (and we’re not talking about that shag carpet installed in the ‘70s)! What does it mean in terms of your homeowners insurance? Well, it means the house could have a higher risk level for things like fire or water leaks – which are causes for concern for any home insurance company. Here’s what to look out for:

• Heating. If your fixer upper comes with a wood-burning or pellet stove, or an old fireplace, make sure it’s been professionally installed, maintained, and kept up to code. Since these are all more likely to cause a fire than a modern furnace, your insurance could be affected if your home has one – and you could see higher premiums.
• Wiring. Many houses that were built before 1950 have knob and tube wiring. Why is this an issue? One simple reason – it’s a serious fire risk. For one thing, there’s no ground wire so nothing prevents outlets and appliances from sparking. And, because of its age and the way the wires are configured, it’s not suited to handle the demand a modern homeowner has for electricity. Some insurance companies don’t insure houses with knob and tube wiring at all – but, they might give you time to have it removed and replaced.
• Roof. The newer the roof, the less risk there is for leaks, deterioration, and damage to your home. So, you won’t be too surprised to hear that insurers aren’t big fans of insuring homes with older roofs. Ideally, your roof shouldn’t be more than 15 years old. If it’s over 25 years old, you’ll probably have to replace it if you want to get insurance, since most providers won’t insure a home with a roof that’s older than that. Make sure roof inspections are a regular part of your home maintenance.
• Plumbing. Homes that are more than 65 years old may have galvanized pipes that rust from the inside out. Besides lousy water pressure, you could also end up with leaks or burst pipes – situations you obviously want to avoid. An insurer could ask you to replace them with copper or plastic pipes before offering you insurance.
• Oil tanks. An oil tank has a lifespan that depends on what it’s made of (fiberglass vs. steel) and its location. If your oil tank has passed its lifespan, it could be prone to rusting and leakage. Your insurer might ask you to have it replaced with a new one, or with a gas or electrical furnace. What if there’s more than one oil tank on the property? Chances are, you won’t be able to get home insurance – it’s just too risky.

Heads up! Live in Ontario? Your insurance company could require you to upgrade the plumbing, electrical and/or heating systems in your home before they give you a new policy, or renew your current policy. Read more about it on the FSRA’s website.

Is insurance more expensive on an older home?

In general, yes. Older homes usually require a lot more maintenance and repair, and many don’t meet today’s safety standards. This means your insurer is taking on more risk to insure the home. If they agree to insure your home, you could expect to see a higher-than-average premium.

What should I know about replacement cost for an older home?

If something happens to your older home, your home insurance coverage can help you rebuild. And replacement cost helps you rebuild without deduction for depreciation. But, it could cost a whole lot more to bring an older home up to modern safety regulations. You should find out what the replacement cost is on your older home, since it could affect your insurance costs.

What else should I think about when I’m getting insurance on my older home?

Let’s face it, old houses are a lot of work. Some haven’t been properly maintained for years and could have mould, termite damage, or even sewer pipe corrosion – and none of this is covered by home insurance. If you’re thinking about buying an old house in need of repair, you should have the house inspected for these types of damage and factor the extra cleaning and repair costs into your budget since most house insurance policies won’t pay for it.

I want to renovate my fixer upper. Do I need special home insurance for renovations?

You might. If you’re performing upgrades that require extensive work, like adding an extra floor to your home, you’ll likely need to change your policy to one that covers a building under construction. This is commonly called a builders risk policy. It covers things such as liability for on-site accidents and weather events, like if a heavy rainstorm blew into a temporary opening and caused water damage to new wood inside the house. If you don’t tell your insurer that you’re renovating and something happens, you risk having your claim denied – or even having your coverage voided.

If you’re just doing cosmetic work on your place – like swapping out your old kitchen counters for a modern marble surface – you probably won’t need a builders risk policy, but you should tell your insurer anyway. It’s always best for them to know about any changes you’re making to your home, since it could change its value.

Doing minor renos but not living in the house while they’re happening? Having a vacant home can also affect your coverage when it comes to things like glass damage, water damage, and vandalism – and, you’re obligated to tell your insurer.

Can renovations lower insurance costs on my fixer-upper home?

They could! Some renos could qualify you for savings on your insurance, like:

• A new roof. Replacing your old roof could reduce insurance costs and help prevent future damage (and future claims), like water leaks.
• Updated plumbing and wiring. Updating older plumbing and wiring and bringing them up to current building code could lower your rates. This includes adding a sewer backup valve, which will help you avoid smelly – and costly – situations.
• Security systems. Installing security cameras, alarm systems, deadbolts, or motion sensor lights all make your home more secure – and could lower your insurance payments, too.
• Fire monitoring system. Built-in smoke and carbon dioxide alarm systems might not give you a discount on your insurance, but their ultra-sensitive sensors will help alert you to fires early on. This could help prevent serious damage to your home – and expensive fire claims, which could raise your insurance rates.

Here’s a list of home improvements that make your insurance company happy.

Heads up! Major upgrades, like building an addition, can raise the value of your home. This could raise your home insurance as a result, since your property will probably cost more to repair or replace. Before you commit to anything, it’s worthwhile to weigh the pros and cons of buying a new home vs. a fixer-upper.

Whether you’re going to restore your older home’s vintage features or modernize it into a more contemporary abode, you need to tell your insurance company about any changes or upgrades you’re planning. This way, you can check “home insurance” off of your to-do list and settle into your fixer upper worry free.