The insurance industry is certainly complicating the home buying process! We have run into many insurance concerns in the post 9/11 insurance world. Unfortunately, the list of issues is a moving target, so the possibility of new issues arising is ever present.
First among these is the issue of knob and tube wiring. The short answer is: if the house has it, it’s not insurable. The longer answer is that minor amounts may be acceptable to certain insurers, at certain times of the year. We recommend a call to the purchasers insurance broker immediately. We will include the cost of removal and replacement in our report. Typically less than 10 percent of the total wiring is the maximum amount an insurance company is willing to insure.
Another electrical issue is 60 Amp services. This size of service was typical in houses prior to 1960. They can be overloaded with modern electrical requirements. Expect any insurer to require a service upgrade within a few months of ownership change.
Aluminum wiring typically needs to be updated within a few months of ownership change. Aluminum wiring was used primarily from 1969 to 1977. If found, expect the outlets, switches and wire nuts to need updating. We inspect roughly 150 aluminum wired house per year. The vast majority require updating in differing measures.
Oil tanks are another common insurance issue. The risk is leakage and contamination of the environment around the tank. Tanks inside the house must typically be newer than 20 years, and underground storage tanks will typically not be insurable, even if they are currently in use. Abandoned tanks should be removed.
Galvanized steel supply piping is currently uninsurable. Supply piping is under pressure, and steel eventually corrodes, so the flood risk associated with old galvanized steel piping is one which no insurer wishes to assume. Immediate replacement will be recommended when we find this.
Polybutylene supply piping was installed between 1979 to 1995 and there have been issues with it failing under normal use. The reason for its failure is not yet well understood. Many polybutylene piping systems are still in use, and have not experienced failures. It has been rumered that some insurance companies are not comfortable insuring this piping system. A call to the insurance comany is suggested.
Some siding materials have been insurance concerns in the past. These are typically a fire insurance issue, as they were very combustible. Insulbrick is an example of this.
