Home Insurance Issues

Home insurers are increasingly wanting more information about the home they insure including:

• Plumbing ie. water supply lines
• Age of hot water heater
• Electrical: Knob and Tube Wiring

“Knob and tube” wiring was used for about 50 years starting in the early 1900.s. It is characterized by the use of separate wiring, ceramic insulators, and no junction boxes.  Previous homeowners may have added outlets without proper connections. Sometimes, the homeowner over-fuses, that is, uses 25 or 30 amp fuses to eliminate the 15 amp fuses from blowing out. The knob and tube wiring is “ungrounded,” which means that it will not support three-prong plugs and appliances. Wires and insulation can become brittle and more susceptible to catching fire.

Insurance Issue: Some insurers will not insure houses with Knob and Tube. Some will insure but the new owner must eliminate all knob and tube within a specified amount of time (3 months typically).

• Electrical: Aluminum Electrical Distribution

From the mid 1960’s to the mid 1970’s, single strand aluminum wiring was used extensively in homes. Because aluminum tends to oxidize and is incompatible with certain fittings designed for use with copper wiring, problems have been reported with overheating and the failure of aluminum wiring terminals. Signs of these problems include discoloration of the wall receptacle, flickering lights, and the smell of hot plastic insulation.

Insurance Issue: Similar to knob and tube.

• Fuel Oil Tanks

Oil tanks containing fuel to heat homes can be outside, either above or below ground, or inside in the basement.

As these tanks age, they often start corroding from the inside out, so that failure is not immediately visible or detectable. Condensation can build up and since oil is lighter than water, the water sinks to the bottom and corrosion begins. The main concern is the leakage of oil into the soil and groundwater. Clean up, including environmental testing, can be extremely expensive.

Insurers do not like oil tanks and often will not insure if the oil tank is 10 years old.

• Galvanized Plumbing

Galvanized plumbing, in which the pipes are coated with zinc, was installed in homes prior to 1950. Old pipes tend to rust or corrode from the inside out. Problems can be detected by the reduction in water pressure and restricted water flow. The worse case scenario is leaking and flood damage to the home. Since galvanized plumbing’s life expectancy is approximately 40–50 years, the risk of leakage after that period is very high.