Sunday, August 25, 2013

Issues Affecting Older Homes for Insurance Coverage

If you are buying a house older than 30 years it’s always a good idea to speak to your insurance company before finalizing the deal. Insurance companies may ask you to upgrade one and more components of your house before providing you with the insurance coverage. You may need to budget the upgrades in the purchase offer you make for the house.

There are many items to look out for but the main areas of concern are!

1. Oil fuel Tank

Oil fuel tanks if leaking can cause Environmental Hazard which can cost enormous amount of money to clean up. The oil tanks older than 25 years have a higher potential of developing rust and thus leaking oil. Most Insurance companies require the tank to be inspected by Technical Standards and safety Authority (TSSA) inspector. Furthermore, if the oil tank is very old the insurance company may ask to get it replaced with a gas or electrical furnace before insuring your home.

2. Wood burning stoves

Wood burning (solid fuel) burning stoves can pose a very serious fire hazard and a health Hazard as they can generate carbon monoxide if not properly vented or installed. Insurance companies may ask the stove should be inspected by Wood Energy Technical Training (WETT) Technician and certified by Underwriters Laboratories of Canada (ULC), Canadian Standard Association (CSA) or Warnock Hersey before providing insurance coverage. Furthermore, the stove should be cleaned and inspected yearly by Professional sweep to check the chimney liners for development of creosote and any cracks, which can be a Fire Hazard.

3. Knob and tube wiring

Knob and tube wiring is mostly found in houses older than 50 years. its consists of parallel hot (black) and neutral (white) wires, separated by knobs (or insulators) and ceramic tubes.

Knob and tube wiring is considered a higher risk wiring than the modern wiring installation because.

a. There is no ground wire thus it’s a safety hazard. also since the receptacles are two prongs many modern equipment will not be able to connect and the prongs needs to be replaced by GFCI protected Three prong outlets, or the wiring has to be changed to modern Romex (three wire) wiring.

b. Giving their age, the wires are highly susceptible to wearing and exposure, presenting a serious safety hazard. The wires can also be covered by insulation at some locations which can result in overheating and is a Fire Hazard.

c. The accidental contact of hot and neutral wires may potentially cause a electrical fire.

The insurance company may ask to replace the Knob and Tube wiring or alternatively ask to get it inspected by licensed electrical contractor for safety before insuring your home.

4. 60-Amp Electrical Service

60-Amp service was prevalent in the homes built prior to 1950. This service may not be sufficient to run modern equipment in the house. There is a chance of overloading and overheating the panel which is a major Fire hazard. Insurance companies may require you to upgrade the service to 100-Amp which is a standard for modern homes or to install a switching devise that allows for the operation of only one major appliance at a time.

5. Galvanized Steel Plumbing

Galvanized steel pipes, commonly installed in homes prior to 1950, have an average life expectancy of 40–50 years. Over time, the galvanized steel pipes begin to rust or corrode from the inside out, resulting in reduced water pressure and restricted water flow. This presents an increased risk of leaks or ruptures occurring in the pipes and the potential for flood damage. Your insurance company may require you to replace galvanized steel piping with copper and plastic piping before providing you with insurance coverage.
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