Insurers typically look closely at a building’s condition, maintenance history and critical systems when deciding whether to offer coverage and at what price. Deferred maintenance, outdated electrical or plumbing systems, aging roofs and structural concerns can increase the likelihood and cost of a claim.
If you own an older building or plan to buy one, several factors can complicate your insurance coverage and increase the price you pay for it. Here’s a look at four of them.
1. Building codes can complicate repairs
A building constructed decades ago may have complied with codes at the time but likely falls short of current requirements. After a covered loss, local authorities may require portions of the property to be brought up to current codes before repairs can be completed.
Required work could include electrical and plumbing upgrades, accessibility improvements, fire sprinklers, alarms, emergency exits or other life-safety measures. A standard property policy may not cover all of these additional costs.
This is where ordinance or law coverage may help. Depending on the policy, this coverage may address the loss of an undamaged portion of a building that must be demolished, demolition and debris removal expenses, and increased construction costs necessary to comply with current codes.
What you can do:
- Review ordinance or law coverage and limits with us.
- Identify major areas where the property does not meet current codes.
- Consider completing critical upgrades before a loss occurs.
2. Aging systems increase loss potential
Time takes a toll on roofs, wiring, plumbing, HVAC systems and structural components. Older electrical equipment may increase fire risk, while deteriorating pipes can lead to leaks and significant water damage.
Deferred maintenance can compound these problems. Insurers may request inspection reports, photographs and documentation showing when the roof, electrical, plumbing and HVAC systems were last inspected, repaired or replaced. Poor maintenance may result in higher premiums or deductibles, coverage restrictions or difficulty obtaining coverage.
Structural problems are another concern. Cracks, corrosion, foundation problems and deterioration that go unaddressed may create property and liability risks.
What you can do:
- Establish and document a preventive maintenance program.
- Have critical systems periodically inspected by qualified professionals.
- Address structural concerns promptly and retain records of completed work.
- Prioritize aging roofs, wiring, electrical panels and plumbing for replacement.
3. Security and liability exposures
Older buildings may also have security and safety features that have not kept pace with modern standards. Poor lighting, outdated locks, inadequate alarms and limited surveillance may increase exposure to theft, vandalism and other criminal activity.
Worn stairways, sidewalks, handrails and common areas can also create slip-and-fall incidents or other liability hazards if they are not properly maintained.
What you can do:
- Upgrade exterior lighting, locks, alarms and surveillance systems.
- Regularly inspect stairs, walkways, parking areas and other common spaces.
- Correct hazards quickly and document inspections and repairs.
4. Valuation, asbestos and historic features
Establishing an adequate insured valuecan be particularly challenging for an older building. Replacement costs may include specialized labor, unusual materials, engineering expenses and work required to reproduce architectural details.
Historic properties can present additional complications because preservation requirements may restrict how repairs or reconstruction are performed.
Older buildings may contain asbestos, lead-based paint or other materials that require specialized handling during renovation, demolition or rebuilding. The cost of handling these materials can further increase the expense and complexity of a claim.
What you can do:
- Identify historic preservation or architectural requirements that could affect reconstruction.
- Determine whether hazardous materials are present and understand how your insurance may respond to remediation costs.
Upgrades can improve insurability
Owners sometimes postpone major improvements because of the cost, but delaying necessary work can make an aging property increasingly difficult to insure.
Updating electrical and plumbing systems, replacing an aging roof, improving fire protection, strengthening structural components and modernizing security can reduce the likelihood or severity of a loss. These improvements may also give insurers greater confidence in the property’s condition.
Keep detailed records, including invoices, inspection reports and photographs of upgrades. Insurers may ask for this information during underwriting.
Finally, review your property coverage with us annually. The condition of an older building changes over time — and so do construction costs, building codes and insurance requirements. Regular reviews can help identify coverage gaps before a loss reveals them.
