What you need to know about insuring a heritage home

Historic properties are not just places to live, but also unique connections to a city or country’s past. In addition to harbouring current residents, they preserve a significant, tangible piece of history.

But owning a heritage home is not without its challenges. Getting such a property insured can be more complex and costly than for a typical house. Insurers tend to view these older houses as higher risk due to their age, unique construction materials and building techniques.

This guide looks at what it takes to be classified as a heritage home, what to consider when thinking of buying one, as well as the challenges of finding the appropriate home insurance coverage for these unique properties.

What is a heritage home?

While most provinces and territories have their own specific qualifications for heritage homes, these properties are typically older and are either built by a specific architect or exhibit a unique architectural style, or otherwise hold some other historic or cultural significance.

To be considered a true heritage property, a home must go through a formal designation process, which will vary based on your municipality. Once it is officially designated a heritage property, it then takes on special status and can’t be altered or destroyed without permission.

 For example, the Ontario Heritage Act allows municipalities to decide what properties can be designated heritage homes based on their “cultural heritage value or interest.”

Why is a heritage home harder to insure?

Like most older homes, heritage homes are more difficult to insure for several reasons. Not only is it harder to find the right coverage that fits your home’s unique profile, that coverage also tends to be more expensive than your standard home insurance policy, says Daniel Mirkovic, co-founder and CEO of Square One.

“You will likely face a more comprehensive application process when you’re looking to insure an older home,” he says.

That’s because older homes: 

• predate modern building codes
• tend to have older building systems (i.e., heating/cooling, electrical, and plumbing)
• have typically undergone several renovations
• may face additional conditions when repairing or rebuilding

“Insurance providers will need to understand the current state of the house to assess risks and determine rates properly,” he adds. “Insuring heritage homes will cost even more because approval is often required when repairing or rebuilding exterior and sometimes interior parts of the house.”

Related: Why your home insurance rate may rise even if you’ve never made a claim

Inspecting a heritage home

Because of how complicated heritage homes can be, it’s vital to have a thorough assessment of a heritage property by an inspector who specializes in these types of structures before closing on the home.

A professional inspection will not only inform you of the risks in the home, but also any upgrades you may want or need to make to get your property insured.

“There are definitely some things to consider from an insurance standpoint when thinking about buying a heritage property,” says Josh Hansen, a personal insurance advisor at Mitch Insurance Brokers.

You’ll need to know how old the home is, what type of wiring and plumbing it relies on and whether updates have been made for these systems — and whether the home can even be covered by insurance.

Without this knowledge, your mortgage may even hang in the balance.

“Most insurance companies will not offer a guaranteed building replacement cost endorsement for homes designated as heritage, which may be a requirement for your mortgage lender,” says Hansen. “Make sure to discuss what’s required for insurance coverage with your lender prior to finalizing the purchase to ensure you’re able to meet all of the conditions of your mortgage.”

Potential exclusions in insurance policies for heritage homes

Hansen cautions that insuring a heritage home can come with some unique challenges and limitations compared to a newer property.

“Depending on the dwelling characteristics of the home, coverage may not be available with a standard insurance company,” he says.

Common risk factors associated with much older properties include:

• Age of the home: Some insurers may not cover homes over 100 years old or were built before a certain year (like 1900, for example). However, there may be exceptions if the home has undergone extensive renovations.
• Knob and tube wiring: Some companies may refuse to insure homes with knob and tube wiring entirely. Others or may have specific rules around extent of the wiring (say, that no more than 10% can be old wiring, or it must not be present in high-usage areas like a kitchen or laundry room).
• Plumbing: Insurers may not insure heritage homes with obsolete plumbing materials like cast iron, galvanized steel or lead.
• Heating: Lastly, having more than one solid fuel-burning appliance, such as a wood stove, can affect a home's insurability.

Because of how complex these homes are, it’s likely that a heritage home would only be able to be insured by a specialty insurer, which often comes with more expensive premiums and certain exclusions to coverage – like overland flooding or other uninsurable perils.

Hansen recommends speaking with an insurance broker or provider to go over coverage options before closing on the sale of a heritage property.

“This will help with budgeting for these expenses and cut down on any surprises around obtaining insurance coverage,” he adds.

Related: Three home insurance endorsements to consider based on where you live

Budgeting for heritage home insurance

As mentioned in the previous section, insuring a heritage home will likely be more costly than insuring a newer home. Daniel

• The home’s heritage designation type (i.e., approval required for external or both external and internal changes/repairs)
• How and when the building systems were last updated
• Whether the home has had any claims. For example, if it has older plumbing and has sustained water damage claims, then it will be more costly and difficult to insure. 

“One way to keep costs down is to secure a home inspection and ensure any deficiencies are addressed,” says Mirkovic. “Then, share this information with your home insurance provider.”

While no one entertains the idea of buying a heritage home to save money, the costs to purchase, maintain and insure a historic property can quickly add up – particularly if your mortgage also hinges on having certain insurance endorsements, like the Guaranteed Replacement Cost endorsement.

To ease the financial burden, various levels of governments offer sales tax rebates for certain costs associated with the upkeep of a heritage home – for example, on the purchase of special building materials, or the services of skilled craftsman for restoration work.

Municipalities can also offer some property tax release for heritage designated properties.

The National Trust of Canada provides a list on its website of potential grants for heritage homes.

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