Insuring an older home with knob and tube wiring

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An older or historic home boasts appealing vintage aesthetics and architectural charm. However, along with the beauty of these classic structures comes the potential challenge of outdated electrical systems, such as knob and tube wiring. This early form of electrical wiring was common in homes built before the 1950s and, while it might have served its purpose decades ago, it now raises significant safety concerns. These concerns can complicate the process of securing home insurance, as many insurers view knob and tube wiring can pose a serious fire and electrocution hazard.

The first step is to have a licensed electrician inspect the system to assess its condition and safety. If the wiring is in good shape, some insurers may still provide coverage, though often at a higher premium. However, many home insurance companies will require that the wiring be upgraded to meet current safety standards before issuing a policy. If replacement is needed, consider getting multiple quotes from electricians for the rewiring job, as it can be a significant but necessary investment in your home’s safety. Once the wiring is updated, you’ll find more insurance options available, often at more competitive rates.

Key Takeaways

Due to unique features and outdated systems, insuring an older home often requires specialized coverage, such as guaranteed replacement cost or ordinance or law coverage.
Insurance premiums for older homes tend to be higher because of the increased risks and costs associated with repairing or replacing antique materials and systems.
Homeowners can lower insurance costs for older homes by upgrading outdated systems, such as wiring and plumbing, and adding safety features like smoke detectors and security systems.

Why do some homes have knob and tube wiring?

Most homes constructed before 1950 — especially homes built from 1880 through the 1930s — used a type of electrical wiring called knob and tube.

“This type of electrical system was prevalent prior to 1940 because it was less expensive to install than other types,” explains Kenneth Gregg, CEO of Orion180 Insurance Services, LLC, in Melbourne, Florida. “Knob and tube wiring contains only a live hot wire and a neutral return wire, versus modern-day wiring that includes a ground wire. The lack of a ground wire is a significant fire hazard.”

Brian McCabe, with Provision Insurance Group in Bingham Farms, Michigan, adds that knob and tube homes also typically have an old-fashioned fuse box with ceramic and copper fuses rated for a specific load. These fuses need to be replaced when blown.

“Knob and tube wiring was very popular before homeowners began needing more power in their homes to operate refrigerators, air conditioners, televisions, computers and other modern electronics that have become standard household items and require more power,” says Mark Friedlander, director of Corporate Communications for the Insurance Information Institute.

Homeowners insurance companies see homes with knob and tube wiring as high-risk.

Why is knob and tube wiring a concern for insurance companies?

Older residences with knob and tube wiring can frequently overload, posing a fire hazard because of the power demands of today’s homes.

“As many older homes have undergone renovations, knob and tube wiring is now often covered with insulation and pushed into close contact with other building materials, resulting in a major fire hazard,” Friedlander cautions.

McCabe points out that the original insulation of these wires can fail over time, with the copper becoming exposed.

“Exposed wiring can be both a fire hazard and an electrocution hazard,” he says. “Also, when a fuse is blown on these older systems, due to a power surge or overload, it must be replaced with a compatible fuse — which are hard to find these days — not just reset, as you can do with today’s modern circuit breaker boxes.”

Can I get homeowners insurance with knob and tube wiring?

It’s unlikely that you’ll find an insurance company willing to provide coverage if your home still has knob and tube wiring.

You may be able to get a type of home insurance called HO-8 or modified form insurance, or limited coverage from a specialty home insurance company. However, many insurance companies will not offer it at all.

“Most insurance companies require homeowners to convert to modern electrical standards within 30 days of purchase. Additionally, most mortgage companies will require this conversion to reduce their exposure as the mortgage holder,” McCabe says.

If you own a home built before 1940 or plan to buy one, your homeowners insurance agent will ask about the home’s electrical system. If it’s been updated to modern codes and standards, you shouldn’t have a problem getting a standard policy.

If you don’t convert the electrical system within that deadline, your insurer may cancel the coverage, McCabe says.

“This will trigger letters to your mortgage holder, which may cancel your mortgage loan. Either way, no one wants to assume the risks involved,” adds McCabe.

Friedlander says an insurer may consider providing coverage but will require an electrical inspection of your home “to determine the condition and functionality of the wiring before an underwriting decision can be made.”

If your insurance company doesn’t ask about your electrical system, you’re still obligated to notify the carrier if you know about older wiring and electrical components in your home.

“Failure to do so would constitute serial misrepresentation and would invalidate your homeowners insurance policy in the event of a claim,” warns Gregg.

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Which companies insure knob and tube wiring?

You’ll likely have trouble finding insurance companies that cover knob and tube wiring because of fire and electrocution hazards.

“If you don’t plan on upgrading the wiring and electrical system anytime soon, you will more than likely have to seek out an excess and surplus lines underwriter of personal lines insurance that would be willing to insure your home at a significant extra cost in premiums,” adds Gregg.

If you have an older home with knob and tube wiring, be aware that you may not be able to buy a replacement cost policy. Instead, you may have to settle for a modified replacement cost policy.

“This means that instead of repairing or replacing features typical of older homes, like plaster walls and hardwood floors, with similar materials, the policy will pay for repairs using the standard building materials and construction techniques in use today,” says Friedlander.

“Some carriers won’t insure older homes for the replacement cost because of the expense of re-creating special features like wall and ceiling moldings and carvings.”

If you find an insurance company willing to insure your older home, consider purchasing an extended or replacement cost policy. Friedlander says this will pay a certain percentage over the limit to rebuild your home — 20% or more, depending on the insurer.

“This way, if building costs go up unexpectedly due to a shortage of building materials or construction workers. For example, you’ll have extra funds to cover the bill,” notes Friedlander.

What to do if homeowners insurance won’t cover your home because of knob and tube wiring

The good news is that you can have comprehensive coverage once you upgrade your electrical system.

“By replacing knob and tube wiring with modern electrical wiring, you are creating a much safer environment for your family and preventing many unnecessary risks,” says Friedlander. “The other major benefit is you will be able to purchase standard homeowners insurance coverage and not pay an excessive premium because of your home’s antiquated wiring.”

Frequently asked questions about knob and tube wiring

How much does it cost to replace knob and tube wiring?

You can expect to pay at least $5,000 to replace knob and tube wiring depending on the size of your home. The cost may exceed $10,000 depending on the work and repairs by a licensed electrician.

If you were to keep the old wiring and find an insurer to cover you, expect to pay between 50% and 100% more per year for insurance coverage than an updated home with modern electrical components due to the high underwriting risk, Friedlander says.

Is knob and tube wiring a fire hazard?

Yes, knob and tube wiring can present a major fire and electrocution threat.

Many homes with older electrical systems are remodeled. This old wiring is often covered with insulation and pushed into close contact with other building materials, resulting in electrical fires.

Also, the original insulation of these wires can fail over time, with the copper becoming exposed.

Should you buy a house with knob and tube wiring?

You may still want to purchase a home with knob and tube wiring, especially if it has architectural features and historic charm you value.

But the experts agree: You will need to protect these homes for your own use and future generations by updating important systems and components like:

Electrical
Plumbing
HVAC
Foundation
Roof

In fact, your insurer and mortgage lender may require those upgrades.

“Make sure you have the right insurance coverage in place and a good team of remodelers and repair professionals to help you along the way,” recommends Brian McCabe with Provision Insurance Group.

Is knob and tube wiring legal?

Local building and electrical codes can vary. However, it’s likely not against the law to have a home with knob and tube wiring systems in your area.

The problem is that home insurance companies and mortgage lenders won’t tolerate this kind of electrical system.

The home likely won’t pass a professional home inspection that lenders often require. You’ll then be required to convert to modern electrical service.

Erik Martin

Contributing Researcher

Erik J. Martin is a Chicago area-based freelance writer whose articles have been published by AARP The Magazine, The Motley Fool, The Costco Connection, USAA, US Chamber of Commerce, Bankrate, The Chicago Tribune, and other publications. He often writes on topics related to insurance, real estate, personal finance, business, technology, health care, and entertainment. Erik also hosts a podcast and publishes several blogs, including Martinspiration.com and Cineversegroup.com.