Homeowners Insurance for Older Homes

Are Older Homes More Expensive to Insure?

Older homes often cost more to insure because they are generally more prone to risk and more expensive to rebuild or repair. Insurance premiums for a home built in 1980 average about 55% higher than for a home built in 2024, according to the Guardian Service insurance agency.

There are several reasons insurance for older homes may cost more.

• Wear and tear: Roofs, plumbing and heating systems and other parts of an older home tend to wear out over the years, especially if they haven't been regularly maintained. Wear and tear can make an older home more susceptible to damage.
• Outdated systems: Older plumbing, roofing and electrical systems can pose major risks for insurers. Knob-and-tube wiring, used throughout the 1930s, greatly increases fire danger; some carriers won't insure homes that have it. Aluminum wiring, popular in the 1960s and '70s, can also be a fire hazard.
• Code upgrade requirements: If you file an insurance claim, bringing an older home up to current building codes adds to the cost of repairs or rebuilding. There may also be extra costs to dispose of hazardous materials such as asbestos.
• Materials: Rebuilding or repairing an older home using original materials and features, such as solid-core doors, plaster walls or leaded windowpanes, is likely to be more expensive than using current building materials. Period-specific parts and contractors skilled in these types of repairs may be harder to find and cost more.
• Historic restrictions: If you live in a designated historic home, you'll have to follow national, state or municipal standards for rebuilding and repairs, which can add even more to the cost.

Learn more: How to Calculate the Replacement Cost of Your Home

Will Your Lender Require Home Insurance?

Mortgage lenders generally require homeowners insurance to protect their financial interest in your home. (This is different from mortgage insurance, which protects the lender if you cannot make your mortgage payment.) You'll typically need to carry enough coverage to rebuild your home. For older homes, lenders may also require a home inspection before approving your application for coverage.

If your house isn't mortgaged, you're not legally required to have homeowners insurance, but going without it is a major risk. Your home is most likely your single biggest asset, so it's important to protect it.

Did you know? Lenders typically require you to have homeowners insurance in order to get a home equity loan, home equity line of credit (HELOC) or any loan that uses your home as collateral.

Do You Need Special Coverage for an Older Home?

In many cases, an older home can be insured with a standard homeowners policy (called an HO-3), but not always. Whether you need specialized coverage depends on your home's condition, unique features and the cost to rebuild.

When a Standard Policy (HO-3) Works

A standard HO-3 policy, the most common type of homeowners insurance, covers your home against all risks that aren't specifically excluded. You may be able to use a standard policy if:

• Your home is well maintained or recently updated
• The major systems (roof, electrical, plumbing, heating and cooling) are in good condition
• The replacement cost is in line with the home's market value
• The home's condition meets the insurer's underwriting requirements

In this situation, you may get enough protection by adding optional coverage, such as ordinance or law protection, to a standard policy. (More on that below.)

When a Standard Policy May Not Be Enough

If a home is deemed too risky, some insurers may refuse to cover it under a standard homeowners policy. You may need specialized home insurance if:

• The home is in poor condition
• The home has unsafe or outdated systems
• Rebuilding your home would cost significantly more than its market value
• Your home is designated historic or has unique architectural features

Add-On Coverage You May Want

Even if you qualify for a standard homeowners policy, you may need additional coverage to fully protect your older home.

• Guaranteed replacement cost pays to rebuild your home as it was before the covered incident, even if doing so costs more than the policy limit. This coverage helps protect homeowners from soaring materials and labor costs that often occur after a widespread disaster.
• Extended replacement cost is similar, but instead of guaranteeing full payment, it pays up to a specified percentage (usually 20% to 25%) over your policy limits.
• Ordinance or law coverage pays for upgrades required by current building codes when repairing or rebuilding your home.

Tip: Standard home insurance does not cover damage from floods, earthquakes, sinkholes, landslides and certain types of water damage, but you can buy this coverage separately.

Learn more: Homeowners Insurance Add-Ons You Should Consider

Types of Home Insurance for Old Houses

Specialized coverage for older homes includes:

HO-8 Policy

HO-8 policies are designed for older homes and may be required by insurers if the cost to rebuild is more than the home's market value. Unlike standard home insurance, HO-8 policies cover only risks specifically named in the policy. This typically includes fire or lightning, windstorm or hail, explosion, riot, damage from aircraft or vehicles, smoke, vandalism, theft and volcanic eruption.

Reimbursement is more limited too. HO-8 policies typically reimburse covered losses on an actual cash value basis, meaning your insurer pays the actual cash value to replace your home, minus a deduction for depreciation.

Historic Homeowners Insurance

If your home has been designated a historic home, repairing or rebuilding it with comparable materials and workmanship while bringing it up to current building codes is likely to be expensive. You can purchase insurance designed for historic homes from National Trust Insurance Services.

High-Value Homeowners Insurance

If your home's replacement value is $750,000 or more, you may qualify for high-value homeowners insurance. (Replacement value is the cost to rebuild and differs from your home's market value.) High-value home insurance can be a good fit for older homes that have unique architectural features or high-end materials that increase rebuilding costs. AIG, Chubb and USAA are among the insurers that offer this coverage.

Learn more: How Much Homeowners Insurance Do You Need?

How to Save on Homeowners Insurance

You can lower the cost of home insurance by reducing risks to your home and shopping around for coverage. Here are some steps to take:

• Update major systems. Replacing older materials and systems that put your home at risk, such as your roof, plumbing, heating system and electrical wiring, can minimize hazards that could lead to a claim.
• Bundle your coverage. Buying more than one type of insurance, such as home and auto, from the same carrier—called bundling—typically earns a discount.
• Increase your deductible. Your insurance deductible is the amount you're responsible for paying if you file a claim; raising it usually lowers your rates. Just be sure not to increase it beyond what you can comfortably pay in the event you file a claim.
• Explore discounts. Insurance carriers may offer home insurance discounts for installing a security system or other safety feature; for veterans, seniors, members of organizations; or for going claim-free for a certain number of years.
• Shop around. You can get home insurance quotes online directly from carriers or from sites that match you with insurance products. You can also work with an independent insurance agent who sells coverage from a variety of companies. Be sure you're comparing the same amount and type of coverage from one insurance to another.

Learn more: How to Buy Home Insurance

The Bottom Line

An older home can require special homeowners insurance, but that doesn't always mean more expensive coverage. Your costs depend on a variety of factors, including your home's condition, its unique features and the type and amount of coverage you choose.

In addition to your home's features, your credit-based insurance score could impact your premiums too. While this score is different from the credit scores lenders check, both scores consider information from your credit report. The same factors that can boost your credit scores could increase your credit-based insurance score, which may help you pay less for home insurance.