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Homeowner insurance help/recs - LCOL, high rebuild est., knob and tube wire

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  • Homeowner insurance help/recs - LCOL, high rebuild est., knob and tube wire

    We are in a low cost of living area and are purchasing a $750k primary residence (a dream home well within our means). We have used USAA for multiple other properties, but I hit a roadblock with them today.

    Problem one: the rebuild is coming back at over $3M which is above their limit. Their partner’s calculator puts the rebuild over $5M. I expected this--it is a unique historic home and no one would build this home in this location today. The purchase price to build value/cost is typical.

    Problem two: This is an 1890 home with some knob and tube wire in use which the second insurer will not cover. Two strikes.

    I realize this may be a matter of shopping around for insurance, but I spent 90 mins on the phone with USAA to have them basically tell me they would likely not cover the property (pending final review). Would rather not reinvent the wheel. Any recommendations on where to turn next to find affordable coverage for this situation? Is there a way to avoid the high rebuild cost estimates (and higher coverage cost) or will all the insurance companies base their coverage on this information? Within 3 weeks of closing.

    Thanks!

  • #2
    Chubb was pretty good for higher end houses back before ACE bought them out. Might still warrant a look.

    It's a shame that USAA won't insure this property. That said, a rebuild cost of $3-5M isn't insubstantial. Do you really want to pay what it would cost to insure this house for that rebuild cost?

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    • #3
      USAA is apparently working with Chubb and they are the ones who won't cover knob and tube.

      I do not want to cover for that rebuild cost, but is there a way to opt out of a rebuild coverage number? I've never run up against that where it mattered, until now. I know it will be expensive to cover that number if that's what I end up forced to do.

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      • #4
        Maybe AIG.

        I understand that National Trust Insurance Services will help you place insurance on a unique or historical home.

        There is a particular type of policy you can check into (HO-8) that restricts coverage and may be more cost effective.

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        • #5
          That knob and tube electrical wiring has got to go. There’s a reason the insurance companies don’t want to cover it.

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          • #6
            https://www.coverage.com/insurance/home/ho-8/

            I believe you can insure for less than replacement value. The problem is you are self insuring a portion on any claim after the deductible.
            Full coverage seems to be the problem.



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            • #7
              My sister did a teardown of one of the painted ladies in san fran and though historic, the guts didn't need to maintain ancient wiring standards -- only the exterior and inside look and feel.

              They had gas pipes in the handrails for lighting and wickedly plaster molding. none needed to be replaced in-kind.

              So the replacement costs should HAVE to be huge -- would look into the standards dictated by the historical site. They even put in solar panels without issue with the historical society's approval.

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              • #8
                I would not consider living in a house with antiquated wiring. Plan to upgrade it or buy a different house. Even if you can find an insurer who would cover the house in this condition, it would be crazy to keep these fire hazards.

                At that cost to replace the house, you are well into Chubb/PURE range for companies. They are choosy about the condition of houses they will insure. Does this place have comparably ancient plumbing and other systems?

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                • #9
                  Originally posted by afan View Post
                  At that cost to replace the house, you are well into Chubb/PURE range for companies. They are choosy about the condition of houses they will insure. Does this place have comparably ancient plumbing and other systems?
                  If lead pipes were good enough for the Roman Empire, they’re good enough for me!

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                  • #10
                    I would contact a talented insurance broker who has plenty of experience dealing with a broad variety of insurance companies. That type of broker can likely help you find a company to cover your unique property. Have you tried that route?

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                    • #11
                      I had knob and tube wiring in a house I owned. Never caused me any trouble. As a matter of fact I have only had trouble with modern electrical systems.

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                      • #12
                        Originally posted by Lordosis View Post
                        I had knob and tube wiring in a house I owned. Never caused me any trouble. As a matter of fact I have only had trouble with modern electrical systems.
                        Its not a problem, until it is.

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                        • #13
                          Sometimes it’s wise to pay attention to which way the wind is blowing.

                          It’s not the cost that insurance companies won’t insure. It is the home.

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                          • #14
                            Originally posted by Hank View Post
                            That knob and tube electrical wiring has got to go. There’s a reason the insurance companies don’t want to cover it.
                            This was my first thought as well. I'd get someone in to figure out what it will take to get electrical up to code as well as evaluate any other safety issues in an older home.

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                            • #15
                              Thanks to everyone for the comments! I've passed the property to a local broker and will hopefully get something in place. In the short term, my issue is getting the insurance so we can meet the conditions for our mortgage lender. The HO-8 may be the route, something I'd never heard of, so appreciate that.

                              I think the safety issues are fairly straightforward and I do plan to upgrade the remaining knob and tube wiring. It's lasted since 1890, but as mentioned above, it's not a problem until it's a problem. The irony is the owners upgraded the panels and about 2/3 of the home is rewired, but not all. The family (which has owned it continuously since it was built) is wealthy to the tune of 100's of millions and it's bewildering why they only did part of the job.

                              Anyway, they don't make them like this any more. Wish me luck.

                              ​​​​​​

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