Save On Homeowner's Insurance By Rewiring Your Pre-1950S Home
Many homes built before the 1950s have knob-and-tube wiring, which insurance companies don't like to write policies for. Rewiring a home that has knob-and-tube wiring isn't cheap, but it may help you save on your homeowner's insurance.
In knob-and-tube wiring, parallel wires are run alongside each other but placed far enough apart so that electricity won't arc from one wire to the other. At junctures and when the wires pass through wood, porcelain knobs and tubes are used to insulate the wires, hence the name "knob-and-tube."
According to Blue Crest Electric LTD., knob-and-tube wiring was used in homes from the 1900s to the 1940s. When properly installed and maintained, the system isn't necessarily unsafe. Over time though, several dangers can develop:
- the porcelain knobs and tubes can deteriorate
- wood near the bare wires can get wet and create a short circuit
- improperly made repairs can be fire hazards
- insulation sprayed near the wires can become hot
For these reasons, knob-and-tube wiring is no longer used in new construction.
Insuring Homes with Knob-and-Tube Wiring
Finding insurance for an older home with knob-and-tube wiring is often a challenge, as insurance companies don't want to take on the risk associated with deteriorated knob-and-tube systems.
In their post, Blue Crest Electric mentions that insurers often require an inspection by a licensed electrician before they'll write a policy for a home with knob-and-tube wiring. Most insurance companies won't write a policy if the wiring isn't in good condition. Even if your home's knob-and-tube wiring has been well maintained, though, you may want to have it upgraded.
Upgrading Knob-and-Tube Wiring
Upgrading knob-and-tube wiring isn't a do-it-yourself job. A single mistake could start a fire and burn down your home. Angie's List found that their members paid anywhere from $8,000 to $15,000 to have homes that were between 1,500 and 3,000 square feet required. This may seem like a lot of money, but replacing a home that was burned because of a mistake you made could easily cost 10 times as much.
Getting a Discount on Homeowner's Insurance
Many homeowner's insurance companies offer discounts for rewiring older homes, which can help offset the $8,000 to $15,000 cost. Fox Business reports that some insurers offer a new wiring credit of up to 10 percent off your homeowner's insurance premiums for rewiring an older home.
ValuePenguin places the average homeowner's insurance premium at $952 annually, with individual states' averages varying from $576 to $1,991. Using these numbers, upgrading old wiring could provide an annual average savings of anywhere from $58 to $199, with $95 begin a national average.
These savings won't cover the entire cost of upgrading your wiring, but they will add up in a few years and help offset the job's price.
Recouping More of Your Investment
In addition to saving on homeowner's insurance, you may also be able to recoup some of your investment in new wiring by:
- increasing your home's sale price when you move
- adding the job's price to your cost basis when selling your home and filing taxes
- replacing the knob-and-tube wiring with high-efficiency wiring
If your home was built between the 1900s and 1940s and hasn't had its wiring upgraded, contact a licensed electrician to see whether it has knob-and-tube wiring. If it does, your homeowner's insurance company will likely lower your premiums if you have the wiring replaced. Call your insurance agent to see how much of a discount your home might qualify for, and then compare that discount with the electrician's estimate for the job. You might just be able to upgrade your home's electrical wiring and save money at the same time.