Thursday, January 8, 2009

Homeower's Insurance

House insurance for historic houses can be tricky. There are several good articles and resources online about this topic, and if you are interested in it, you can do your own research as every situation is different.

We had a difficult time finding somebody who would insure our house when we bought it. We tried all the standard insurance companies - AllState, State Farm, Farmers, etc, but none of them would insure our house. Talking to them showed that there were three strikes against us. First, our electrical wiring was the original knob and tube wiring. Second, we wanted full replacement cost for anything damaged or destroyed. Third, our house was on the National Registry of Historic Places. The major sticking points were numbers one and two.

Some of the agents I talked to were willing to consider coverage if we updated our electrical and dropped our request for full replacement value, but I wasn't interested in that. The cost of replacing damaged items in the house with like materials and like craftsmanship is astronomical.

As an example, we are missing picture rail from one of our downstairs bedrooms and I wanted to put it back. I went to a local lumber mill, who specializes in custom doors, chair rails and wood moldings. Naturally, they did not have our picture rail profile in stock. They could make more, but doing so would require a $350 charge to grind a new knife profile that would match the old AND a $150 set up fee to actually attach the knife to their equipment. After the initial $500 charge, the picture rail would run about $1.50 a foot. I'm only missing 50 feet of picture rail, which would be another $75. That adds up to a grand total of $575 for 50' of picture rail.

The other option would be to purchase stock picture rail they have on hand, that doesn't quite match. It runs $1.10 a linear foot. Under a standard homeowner's policy, I suspect that I'd only be given money for 50 feet of standard picture rail and not reimbursed for the full replacement cost.

Using the National Trust Insurance Services, we were able to find a company who was willing to cover us - Chubb Insurance. But even they required us to replace our electrical within the first year, which we did.

One nice fringe benefit of the Chubb policy was an appraisal of our home and it's contents for insurance purposes. An appraiser came out, took some measurements and estimated that to rebuild our home today would cost over four times as much as what we paid for it.

As one would expect, this type of coverage is not cheap and Chubb caters to people way outside of our tax bracket, with some very interesting benefits. If we lose our keys or get them stolen, they'll come out and replace our locks, no deductible. My wife's favorite is that we are specifically covered for "mine subsidence". And my favorite is the example they used about jewelry coverage. "Out on your yacht and lose your Rollex overboard? You're covered." Yacht? Rollex? Good grief.

I received a call from a local agent a few weeks ago who wanted my business. I talked to him at length and described to him our situation. Today I have a meeting today with him. We'll be discussing what he can do for our house insurance. Now that the knob and tube wiring is out of the house (mostly), I'm wondering if it is time to see what is out there for insurance again.


Christopher Busta-Peck said...

We had similar issues getting insurance. One of our problems was the exact opposite of what you state - we were only able to find companies willing to insure for full replacement value - which, for our house, would be somewhere between six and eight times what we paid for it, with premiums to match. When we talked to them about just wanting to be able to buy another comparable old house in the same neighborhood, should something happen to ours, they began to sound more and more scared, and made noises that sounded as though they thought we were going to burn the place down, just to collect on the insurance. That was our big issue - we don't want an exact rebuild. There are a lot of things that could be done better on a rebuild - at least by my standards. A bigger kitchen, a taller basement, a bit more closet space on the first floor, etc. Additionally, to me, a house built in 2009 to look like a 1926 house just wouldn't feel right. We came to the conclusion that if something major should happen to our house, that we'd just sell whatever house they rebuilt for us and buy the house we want. In my opinion, it's just not worth spending another $100+ a month for the rest of my life against that possibility. Perhaps in the future, when I am making more money, I'll feel differently, but for now, I can't stomach that extra cost.

DiploWhat said...

Your insurance is through a group of sewer mutants?!? Oh, wait, that's C.H.U.D.S. Maybe Chubbs is a sewer subsidiary?

Mr. Kluges said...

C.H.U.D. - Charming House, Uber Decrepit.
I'll have to make a point of NOT visiting Chubb at their headquarters.