Last Sunday, the Dallas Morning News published an article about Kristen and Wade Lair. The article related the issues the Lair’s have faced working with city hall on a home they bought to rehab in east Dallas. Their story outlines some of the issues homeowners face when buying a home in a historic district. It also provides an excellent backdrop on home insurance for homes in historic districts.
Historic homes, as well as historic districts are governed by complicated and bureaucratic preservation process. This process mandates obtaining approval for any exterior modifications whether a fresh coat of paint is needed, door placement, window changes, roofing materials, and more. In some cases, the Landmark Commission and various city departments can specify what materials can be used on the exterior of the home.
Such was the case when a number of homes in the area, including several on Swiss Avenue, were struck by baseball size hail in 2012. Many of the affected homeowners had tile roofs which are manufactured by a single US company. Each of the affected homeowners had to order replacement roof tiles from this one manufacturer in order to be compliant with the preservation codes. This lead to a several month delay before the company could produce enough tiles to replace the damaged roofs.
Many home insurance companies will write an insurance policy on a home located within a historic district. I’ve written several policies on homes in historic districts in Dallas, Fort Worth, and McKinney. In each case, I confirm with underwriters who will, exclude those that won’t, and then determine what items they’ll need to know in order to write the policy.
In most cases, the biggest concerns center on updates for the electrical, plumbing, and HVAC systems. In addition, they want to know when the roof was last replaced. As long as the roof is current and there have been updates to the main systems, most underwriters are happy to write a home insurance policy. Once that’s determined, I review the items which will impact the home’s replacement cost including:
- Are the walls plaster or sheetrock
- What kind of molding is used for baseboards and around the ceilings
- If there are chandeliers, are they crystal and how many are installed
- Does it have decorative plaster work around doorways, stairs, etc.
- Are the interior doors solid wood
- Are there lead or stained glass windows
These items and more are input into the replacement cost systems of each carrier who will write a policy. It is these items which make such a home different from many of the homes built today and each one impacts the home’s replacement cost.
If the home is an historic home, one that appears on a local, state, or national registry, then the number of carriers who’ll write home insurance drops dramatically. While there are a few carriers who will write a policy, they will want to know the home’s historical significance and whether the home will be lived in as a primary residence, be used as a museum, or both.
The types of materials that can be used in a historic home, are even more stringent than what the Lair’s have faced in rehabbing their home. In some cases, even the methods to repair the home are dictated which is why most home insurance companies are reluctant to write a policy.
Before embarking on such a project, do your research and know what’s involved, who needs to approve the work and materials used, and who will write a home insurance or builder’s risk policy on it. Otherwise, your dream home, can turn into a bureaucratic nightmare. Share your comments, questions, and experiences with me on my Google +, Facebook, and LinkedIn pages. I’d love to hear from you!