Trials & Tribulations of Insuring Historic Houses from CT Trust & Middlesex Mutual
What’s the Problem? Why Houses in Historic Districts and on the National
Register are Having Problems Finding Insurance
by Maj Britt Kaal, Middlesex Mutual Assurance Company
In the last year, owners of historic houses have found it increasingly difficult to obtain quality
insurance coverage for their properties. This is especially true for houses located in historic districts
or listed on the National Register of Historic Places. Many insurance carriers view these properties
as difficult and costly to repair because there may be an additional party involved in the claim—an
organization, in addition to the local building code inspector, who manages local historic regulations
Created to preserve the visual integrity of older neighborhoods and towns, historic districts
play a pivotal part in monitoring changes and repairs to buildings. As each district is autonomous,
guidelines, specifications, methods of gaining approval, and specific properties covered can vary
widely. As working documents, historic district regulations can be altered. Removed from this local
information, insurance companies fear that their costs will be increased because of the additional
time needed to get approvals for repairs and the extra costs associated with specific required
National Register properties get lumped together with historic district properties in insurers’
minds because they may qualify for preservation easements—even though only a tiny portion of
National Register properties are actually covered by easements. Compliance with easement
specifications may fall outside of the spirit of policy language where replacement of like kind and
quality may only mean replacing original materials with a modern copy.
Compliance with historic district regulations and easements falls under the “law of ordinance”
coverage language in a homeowner’s policy. Homeowners should review policy language to become
familiar with the specific limitations in regard to this coverage. Many policies limit the amount of
coverage to a percentage of the value of the home, but having unlimited coverage provides the most
protection. More importantly, determine if the policy language recognizes historic district building
regulations, National Register status, and easement provisions as enforceable state or municipal
construction laws. When changing insurance carriers, reconfirm that the new policy language
provides the same protection. Having proper law and ordinance coverage is critical, but be aware
that there may be circumstances where even the broadest insurance language will be in conflict with
local regulations. Scenarios where local regulations restrict removal or immediate repair of
dilapidated buildings would fall into this category.
It’s important for owners of historic houses to be proactive about insurance. Request an
evaluation of your insurance policy to determine if critical coverage like “law of ordinance” is
providing the proper protection. Merely assuming that your historic home is properly protected could
mean a big expense for you at the time of a claim.
This article originally appeared in the January/February, 2005, issue of Connecticut Preservation News.
Protecting Connecticut’s Architectural Heritage:
Broad Insurance Coverage Can Make a Difference
by Maj Britt Kaal, Middlesex Mutual Assurance Company
Even novice sightseers slow down to appreciate Connecticut’s treasure trove of historic
houses. It is the zealous attention paid to these properties that has preserved them through years of
wear and weather. But as we look toward the future, are these architectural gems inadequately
protected from possible destruction because of improper insurance?
Many homeowner programs neglect to consider the specific needs of antique houses. In
recent years the majority of insurance providers have altered or capped the coverage they formerly
provided on an unlimited basis. As an antique home owner, now more than ever it is vitally important
to re-evaluate your insurance policy to determine if you have the right coverage that will allow you to
repair or replace your home at the time of a loss. By determining the answers to the following
questions, you should have a better understanding of your current policy coverage, including gaps
where no coverage may exist, potentially resulting in out-of-pocket expenses.
What is your insurance carrier’s claim philosophy for antique houses?
Find out what your carrier means when promising to repair your house with “like kind and quality”
materials. Replacing chestnut plank flooring with strip oak will significantly alter the appearance of
your house, yet some carriers would argue that this is an even trade, since both are hardwood.
Specialty insurance carriers recognize the nuances of historic construction and promise to replicate
the materials and finishes that were actually in your house at the time of loss.
Does your policy have Guaranteed Restoration Cost Coverage?
Do you know if your policy caps building coverage and by how much? Many homeowner policies
limit coverage to 125 percent of the house’s insured value. This limit may seem reasonable, yet it
can easily be exhausted when custom craftsmen or antique materials are needed. The best policies
recognize that rebuilding antique houses may require extra time or specialized skills that can
significantly add to repair costs, and they offer unlimited building coverage using the same type of
craftsmanship and materials.
How will repairs to other structures on your property be handled?
Historic houses often come with barns or other outbuildings that enhance the value and appearance
of the property. Will your current policy reproduce these structures or replace them with modern
counterparts? Replacing a 1790s post-and-beam barn with a metal pole barn diminishes the visual
unity of your property, and may reduce its resale value. Many companies limit coverage for other
structures or provide a different payment basis for claims. Antique house carriers typically provide
higher automatic limits and will give you the opportunity to purchase enough coverage to protect
these buildings to their full value.
Will your personal property be protected in the same manner as your home?
Most policies depreciate damaged personal property. Depending on the age of the item, you may
receive only a portion of the money needed to replace it. This can be inadequate for antique furniture
or collectibles that have appreciated with age. First-rate policies offer personal property replacement
cost coverage. This option pays the full cost to replace your modern possessions as well as
antiques. Even the best policies have limits. Typically jewelry, silver, furs, guns, and coins have
specific limitations. Your independent agent can advise you of the most economical way to
adequately protect your collection.
Do you have law of ordinance coverage?
Building codes have only existed since the 1940s. After a loss, local authorities may demand that
you upgrade undamaged portions of your house to satisfy local building codes. This may mean
adding structural reinforcements, widening stairways, or even moving the house farther from the
road. Quality antique house programs realize that such “law of ordinance repairs” can be a financial
burden for even the most prepared individual. They provide unlimited coverage for these unexpected
Do you have coverage for sewer and drain backups?
Creative plumbing comes with older houses. While most antique homes have undergone numerous
plumbing upgrades, parts of the system may still be antiquated. The worst time to discover these
unrenovated areas is after the line fails and you have sewage flowing indoors. Water damage to
heating systems and other house components can mean expensive repairs. For the best protection,
check to see if your policy offers unlimited sewer and drain backup coverage.
Having the best insurance doesn’t necessarily have to cost a fortune. Evaluate what you are
currently getting for your money. If your coverage could leave you with big bills, consider exploring
other companies. Your research is preventative home maintenance that could make a difference and
protect you financially. Why take the chance of losing the charm and personality of your antique
home because you didn’t take the time to insure it properly?
This article originally appeared in the May/June, 2006, issue of Connecticut Preservation News.
Insuring Your Valuables: The Common Sense of Scheduling
by Richard Young, Middlesex Mutual Assurance Company
Over the years I’ve had the good fortune of being able to see the interior of hundreds of
antique homes. Not surprisingly, many of these homes were filled with fine antique furniture and
artwork. Many also contained collections of items as diverse as the owners themselves; from teddy
bears to tapestries, you name it.
As an insurance professional, it was important to me that our policy owners knew what their
coverages were in regard to these types of items. Overall, I found that while many people
understood the coverage for the house itself, they were often in the dark when it came to contents
coverage. The general presumption was that everything was covered. Unfortunately, this is rarely
the case, often leaving people with significant gaps in coverage. Here are a few things to consider:
Many policies use the term actual cash value for your personal property. This is a
depreciated value based on age and condition of an item and will not cover its full replacement cost.
Even policies using the term replacement cost will only pay the full cost to replace your modern
possessions. Look for policies that use the term guaranteed replacement cost; with this you may
also get additional coverage for antiques, collector’s items and fine arts.
However, even the best policies will have dollar limits in regard to such items as jewelry,
silverware, stamps, coins and items of that nature. The limits for each category can be surprisingly
low; the limit for jewelry for example, is $1,500 on many policies.
You must also be aware of what perils the items are insured against. A peril is an insurance
term for the cause of loss. For contents this would typically be such things as fire or theft etc. If a
visiting child were to take a magic marker to a piece of artwork or an antique chair were accidentally
broken you would probably be without coverage.
So how can you avoid such coverage gaps? By scheduling an item on your policy. By doing
so you and your insurance company will have an established replacement value for the item
beforehand. This will avoid category limits and also facilitate claims settlement. Scheduling will also
broaden your coverage as it protects you against additional perils such accidental breakage. Should
you have a claim on a scheduled item, the deductible is usually eliminated, leaving more money
toward settling the claim.
This article originally appeared in the July/August, 2006, issue of Connecticut Preservation News.
Connecticut Trust for Historic Preservation
940 Whitney Avenue
Hamden, Connecticut 06517