A family was referred to me last year to review their policies. They had home insurance policies on two homes, car insurance for all their vehicles, and an umbrella policy. Everything was straight forward with one exception: the second home. It was originally a barn that had been converted to a home. It wasn’t the New England style red barn with picturesque windows and heavy wooden beams, but rather an industrial style barn typical of east Texas. The sides and roof were made of sheet steel and it sat on a nice slab foundation. The interior had been finished out very nicely with a great living area, beautiful kitchen, and ample bed rooms.
The issue, I found with some of my carriers, was that it started out as a barn and was “converted” into a home. A very nice home mind you, but it was originally a barn. The thought I had as I reviewed the home with several underwriters was “what’s the big deal”? The pictures I showed them indicated there was nothing “unique” about the construction, nor was anything out of order. It had been finished out as many homes in Dallas were with sheet rock, a current electrical box, plumbing, and heating and air conditioning system. The issue, according to some of the underwriters was not the level of finish out, but rather that it was not originally built as a home.
All insurance companies have guidelines about what fits and doesn’t fit their version of a “desired” home to insure. These guidelines detail the type of approved roofing material, exterior siding, foundation, and more. Some companies even have guidelines that prohibit them from writing homes that weren’t originally built as homes. Companies with these guidelines would not be able to write a home that was originally built as a barn, nor would they insure a loft in Deep Ellum that was once a commercial building, restaurant, or club. If you were to rehab an old church or fire house into a home, they would not be able to help you either.
The concerns most companies have that won’t write such a home usually centers on one of two areas:
- They will not write any building that wasn’t originally built as a single or multi-family home
- They have construction related concerns
Some insurance companies simply will not write a home insurance policy on anything that wasn’t originally built as a single family or multi-family home such as a condominium or town home. Regardless of how well the building was built originally the level of finish out when it was converted into a home. For whatever reason, they’ve made a choice not to insure a home that didn’t start out as a home.
The insurance companies will want to confirm several key issues related to the original and conversion construction including:
- When was the roof last replaced and what material is it made of now?
- When did the conversion take place?
- If it’s been several years, have any updates been performed in the past 10 years on electrical, plumbing, or HVAC?
- Who did the work?
- Were licensed contractors used on electrical, plumbing, and HVAC equipment?
- Does it meet current code if there is one?
The companies that raise these issues don’t have as big an issue with its original construction (as long as it wasn’t a mobile home), but they want to make sure the level of construction meets their current guidelines. If it does, they’ll write a home insurance policy on it and they won’t if it doesn’t. So before you embark on buying or renovating something into a dream home, make sure you insurance carrier will write a policy on it. Otherwise, you may find yourself changing insurance companies too!
Have you experienced anything like this? If so, share your experience with us. If you have a comment or question, share them with us too in the comments section of our blog or on our Facebook page. I’d love to hear from you.