Home Insurance Articles
Does Homeowners Insurance Cost More For Older Or Newer Homes
2010-02-07
New or old, every house needs a reliable home insurance policy. For older homes, however, this can be quite costly. On average, older homes cost far more to insure than newer homes, owing to outdated methods of construction as well as materials used. There can be some bright spots for owners of older homes, however, as the neighborhoods they live in may contribute to a lower premium.
The price of any homeowners insurance coverage is based on a number of factors, but what they all boil down to is the level of risk being assumed by the insurance provider. The higher the likelihood that insuring a home will incur one or multiple claims, the higher the insurance premiums will be. For example, an older home will often contain "knob and tube" wiring in its electrical system, which is far more prone to failure and fires. This type of wiring is no longer permitted in most homes, and as a result, a home still possessing this kind of system will have a much higher premium, owing to the risk assumed by the insurance company. Similarly, a newer home may come equipped with a security system or doors with multiple types of locks, a feature which many older homes lack. As a result, the potential for a break and enter increases substantially in an older home, at least from the viewpoint of the insurance provider. This risk is reflected in the total cost of the policy.
It is not all bad news for older homeowners, however, and there can be several things which lower the costs of their homeowners insurance. The first is the neighborhood the home is located in. If the house sits in a quiet residential community with little traffic and a low crime rate, the insurance provider will consider the home to be far safer than if it were located in the downtown core of a city. Similarly, older neighborhoods were often built closer to essential services such as fire and police stations. Newer suburban areas tend to be quite distant from any sort of municipal service, meaning that a break and enter or fire could take quite some time to respond to. Because of that, owners of older homes can be the beneficiaries of lower rates.
Overall, the total cost for homeowners insurance will be lower for a new home simply owing to its longevity and more economically sound construction. Ideally, a homeowner should look for a home which uses the latest wiring and frame construction methods, but is still located near the basic services a city provides. This way, the owner can take advantage of the lower risk offered by newer construction techniques, but still benefit from the home's location.