Insurance Risk Factors
2008/04/24 Originally published in the Vernon Morning Star.
Some older homes may have insurability issues. There may be a problem for potential buyers or homeowners when they try to obtain property insurance. Its' important to note that having valid insurance is a requirement of mortgage companies. So, if there is no insurance a buyer simply cannot get their mortgage funds to make the purchase.
There are several factors that effect insurability. Underground oil tanks would have to be removed because of their potential liability. Professional testing of the soil around such an oil tank may also have to be done.
* Knob and tube wiring that was used in our very old houses usually cannot meet the insurance requirements. 60 amp wiring is another example. It needs to be 100 amp. The insurance companies will normally require these to be upgraded.
* Woodstoves are pretty rare these days but if you do come across one in a home you wish to purchase you need to find out if it has a safety standard label. CSA, ULC, and UL are the common approval labels. Not only must the heating unit meet a standard so must its' installation. There are specific distances from combustible materials, types of pipes and other criteria to be met.
* Galvanized plumbing won't pass the required standard either because those old pipes fail and result in water damage. Insurers most often require this type of plumbing to be changed to plastic.
* Roofs have to be in good shape. So, if the roof is moss covered or the shingles are curling, it's unlikely to meet insurance standards.
* Even the age, condition and frequency of maintenance on the furnace in a home can be of issue.
* Fire inspections specific to wood stoves will probably require a different kind of inspection. This is commonly referred to as a Fire Safety Inspection.
Normally when buyers have an accepted offer on a house they obtain a Home Inspection. Realtors© can usually give buyers a few good names of Home Inspectors. Best to remember to use the inspectors with the Registered Home Inspector (RHI) designation. Our provincial real estate association makes that recommendation. Most of the insurance issues I've mentioned here would be picked up by such an inspection. As long as the buyer has extra funds the correction of any problems is not an obstacle. But, if not, they cannot proceed with the purchase as they wouldn't get the necessary insurance.
Often the insurance company will provide insurance if the buyer completes the upgrades within the first month. Be sure you completely understand the position and policy of your insurance company before you remove subject conditions from your purchase contract. Your Realtor© will assist you with these important details.
Jane Field works with RE/MAX Vernon. Jane has over 30 years experience in the Real Estate business. To suggest topics for future articles or to ask Jane questions, email her or call 503-3755.
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