Older Home Policy, also known as HO-8 or the Modified Coverage form, is designed for older homes and historic homes where historic aspects and some structural peculiarities of the building make its replacement cost considerably higher than the appraised value of the house estimated on the basis of the present day market value of the materials.
Older Home Policy is intended for covering the cost of repairs, but not rebuilding costs. Rebuilding such a home will be a very expensive process because of the cost of the parts and specialized labor needed to restore the home to its original state. Older Home Policy is a packaged insurance policy that offers the same scope of protection as Homeowners Special Form, but the rate of insurance is naturally lower because the policy provides insurance for the market value.
Homeowners Insurance for older homes basically includes the major types of coverage for possessions and for personal liability, but the coverage for replacement usually differs from that in other homeowners policies. The reason for this difference is obvious. Many older homes, often defined as pre-1945, were built with craftsmanship and materials which are very expensive to replace today. Costs increase significantly with high-quality materials and workmanship. Some "older home" features found in homes built before 1945 are more expensive to replicate, therefore, in the majority of cases it costs more to reconstruct an old house than to build a new one. Among the "older home" features are special architectural techniques, antique carving, antique light features, lath and plaster walls and ceilings, plaster moldings and some other types of moldings with regard to quantity and complexity, leaded glass, solid wooden doors, raised paned wainscoting, fanlight or double-hung windows, etc. Surprisingly, many of the enumerated items can be found in homes built after 1945, even up to nowadays. But when it comes to replacing them in an old house, the cost will increase exponentially in comparison to the current market value of the materials used. The rule of thumb suggests that restoring an older home can cost up to 25-45% more than to build a new home with newer materials. Correspondingly, an insurance policy for older homes can cost up to 25% than insurance for newer homes.
An important point to keep in mind if you have purchased an Older Home Policy is that in case of a loss to the insured dwelling there are a lot factors involved in determining the loss. In the event of a loss inflicted to an "older home", it is advisable to apply to a reputable expert who will determine each and every detail of the house that was damaged or destroyed.
Sometimes there can be some prerequisites you will be required to present in order to obtain Older Home Policy. For example, if you want to insure a historic home, some insurance companies may require that the insured dwelling should be listed in the town's registry of homes of historic value or should be located in a recognized historic district. Some insurance companies are hesitant about insuring an older home because of the outdated utilities which are impossible to replace with the same materials. Some companies include special provisions in their Older Home Policy, according to which the outdated systems and features as well as damage resulting from them is excluded from the coverage. You should know that there can be problems getting even a standard Homeowners Insurance policy on an old house. The Insurance companies are normally reluctant to insure the wiring, the plumbing, the heating or/and the electrical system in an older house. In such situations the insurer may require you to upgrade the old elements of the house before providing you with a Homeowners Insurance policy.
Older Home Policy usually requires a high premium cost. But your home may be worth the cost, especially if it has historic value. If it is not, to save the money, you may opt for other standard forms of Homeowners Insurance. Other policies will cover both the damage and the value of the house, but will not cover the cost of restoring the house with the same materials, nor will they cover the reproduction of the structure in case of a catastrophic loss.
If your older home qualifies as a historic home, you can obtain insurance through the National Trust of Historic Preservation. If you are looking for a way to protect your home which qualifies as an older home, it is advisable to choose an insurance company that specializes in older homes. In this case the chances of getting the appropriate amount of coverage at a reasonable cost are greater.
High premiums are the result of the necessity to extend the coverage in order to cover the high rebuilding costs. There is a direct interdependence of the amount of the deductible and the premium costs. You can raise your deductible in order to reduce the premium cost. Then, there are discounts you can make use of. You are recommended to discuss possible discounts with an insurance agent and make sure whether you qualify for them.
Given the wide range of possible requirements on the part of the insurer as well as numerous factors determining the premium, it is always better to speak with your insurance representative about your specific situation.