Historic homes are not defined by a time or a place, or even by a listing on the National Register. Bill Hall, national marketing manager at MiddleOak, explains, "For our Restorationist® policy, we look at homes built prior to 1930, whose main construction and interior features have been preserved or restored. Although protecting homes on the National Register requires unique considerations even beyond those of an antique home, we welcome those homes as well."
"Chubb Personal Insurance looks at each home it insures and its individual characteristics to help guide appropriate coverage choices," says Christie Alderman, vice president, new products & services manager for Chubb Personal Insurance. "We understand that a distinct shift in home construction techniques occurred in the post-World War II construction boom and that it can be more costly to replace homes constructed before this time. Some of the reasons are replacing plaster and lath, hand-hewn nails, or post and beam construction. We also understand and take into consideration a home's architectural history, connections with significant historic events or people, unique architectural methods, and engineering achievements."
A key element of insuring historic homes is adequate valuation. Ms. Alderman explains, "Chubb offers complimentary in-home appraisals to help our customers make sure they are prepared in the event of a total loss to their home. A Chubb appraiser can visit the home to note architectural details and interior features, and then estimate the replacement cost. Appraisers frequently research the prices of individual components within the home to help recommend an appropriate insurance value, even for the most unique homes. Many of our appraisers have backgrounds in historic preservation."
MiddleOak also addresses the uniqueness of each home. According to Mr. Hall, "Our agents can use our estimator tool, but many prefer to call us to discuss the specific home. We then inspect every home to make sure the value is a good estimate. It is fascinating and diverse as to what we find inside these homes. When you see someone literally crying tears of joy because you preserved their personal piece of history is when you realize that you are doing something special. We will replicate the home, and our policy has no dollar limit on restoration cost in case of a total loss. That is the cost to restore, not just replace with new materials. We make it just like old again."
Ms. Alderman states, "After a covered loss, Chubb will pay to have the home repaired or rebuilt to its original beauty – even if the cost exceeds the policy limit. Additionally, in the event of a total loss, and if the customer decides not to rebuild or to rebuild at another location, Chubb offers a cash settlement, up to the policy limit."
Historic home insurance covers the cost to replace damaged plaster walls with plaster, not drywall, and replication of construction techniques used in the period. Instead of paint rollers or sprayers, the walls may be painted by hand. An artisan may be called on to cut wood and dry it in thin pieces to rebuild the interior walls the way they were built over 150 years ago. Antique flooring may be required to match the period, which may involve the use of special aging techniques.
There are a number of factors to consider when arranging coverage for an historic home. Unlimited coverage for living expenses is important because of the time it can take to properly restore such a home. Law and ordinance coverage can be vital when a home must be brought up to current building codes following a loss. Higher limits on trees must be considered because most historic homes have mature trees in their landscaping. Replacing a beautiful oak with a sapling would not be acceptable to most homeowners.
Ms. Alderman explains that the Chubb policy is very broad and doesn't need many enhancements. However, she adds, "Homeowners with large mechanical systems, such as a boiler or generator, may be interested in mechanical breakdown coverage. We also offer flood insurance, which can be an alternative to the National Flood Insurance Program or can provide excess coverage with high limits available, a broader definition of the flood peril, replacement cost valuation, and coverage for additional living expenses."
Similarly, the MiddleOak policy is very broad, and Mr. Hall adds, "We offer specialized scheduled personal property including wine, collections, memorabilia, unusual items, and paintings, as well as blanket coverage for jewelry, furs, silverware, and fine arts."
Exclusions are similar to those in standard homeowners policies. One that may be of particular interest is the vacant residence deductible, which is common to high-value home policies. However, there is no coverage for gradual deterioration. Historic homes are expected to be occupied and well maintained.
Personal property must also be considered when insuring historic homes. Antiques and other valuables should be covered under the appropriate coverage form in order to be properly insured. Coverage can be provided on a blanket or scheduled basis. Personal property can be covered on either a named perils or open perils basis.
Liability coverage is similar to that provided by other homeowners policies. There may be an additional exposure if tours are conducted on the premises. These tours are usually covered but, according to Ms. Alderman, "If a homeowner regularly hosts public events in the home or charges a fee to guests, exclusions may apply and the insured may need to seek a commercial insurance policy."
One of the most challenging aspects of insuring a historic home is helping customers understand the difference between their home's market value and the cost to replace it, which can be significant. Ms. Alderman supplies the following example: "A house was sold as a 'handyman special' and was located on 1/4 acre of improved land surrounded by commercial businesses in a small southern town. The market value of the home was around $190,000. However, the home was solid masonry construction with a slate roof, plaster walls, seven unique fireplaces, and intricate plaster molding throughout, which would have to be re-created by hand--all features that would need to be replaced if a loss occurred. In total, the home would have cost around $950,000 to replace. A big difference!"
Every historic home is unique, requiring an equally unique insurance policy. According to Mr. Hall, "The protection in the historic homes policy is a great value. If the agent shows the client the price difference between the standard homeowners policy and the historic homes policy, and points out the risk of carrying inadequate coverage for an antique home, the historic homes coverage is an easy sale."