Homeowners insurance covers electrical wiring, but many insurers will charge higher rates or deny coverage for older homes with aluminum or knob-and-tube wiring.
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Around 35,000 house fires every year are electrical fires, making electrical components the third leading cause of residential fires in the U.S., according to the National Fire Protection Association. However, electrical and lighting accidents are by far the most expensive causes of fire loss, resulting in almost $1.4 billion in damage from 2013–2017, according to the NFPA.
While homeowners insurance covers electrical wiring under the dwelling portion of your policy, the type and condition of your home’s electrical work can have an impact on your rates. Depending on the insurance company, you may even be required to upgrade your home’s electrical wiring in order to get coverage. Many insurance companies may deny coverage to homes with knob-and-tube or aluminum electrical wiring — two types of wiring that are considered out-of-date and hazardous.
If you’re buying an older home with knob-and-tube or aluminum wiring, consider asking the seller to have the wiring replaced. Not only is copper wiring a safer option, but it could also land you significantly cheaper home insurance rates.
Homeowners insurance covers the structure of your home, including electrical wiring
Homes wired with aluminum or knob-and-tube (K&T) electrical wiring are considered high-risk by insurance companies
If your home has aluminum or K&T wiring, you’ll likely have to pay higher rates and may have a difficult time obtaining coverage
Aluminum electrical wiring was popular in homes built in the 1960s and 70s, and was briefly the preferred and cheaper alternative to copper wiring. When installed correctly and kept in good condition, aluminum electrical wiring can be a safe form of electricity, but some homeowners insurance companies may charge significantly higher rates or deny coverage to homes with this type of wiring.
Aluminum wired homes are considered risky to insure due to their high fire risk compared to copper wired homes. A 2011 report by the U.S. Consumer Product Safety Commission found that homes with aluminum wiring were 55 times more likely to have one or more wire connections at outlets reach “fire hazard conditions” than homes wired with copper.
Aluminum is less durable than copper, giving it far shorter life span. Furthermore, aluminum heats up at a greater rate than copper, and improper connecting or splicing to copper can cause oxidation. Aluminum oxide produces excessive heat which often leads to fires.
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Knob-and-tube (also known as K&T wiring) was a popular method of electrical wiring before the 1950s and is considered an out-of-date form of electricity. This wiring is housed in porcelain insulating tubes, whereas modern copper wiring typically runs through PVC pipe or plastic tubes.
Like aluminum wiring, K&T is brittle and prone to cracking and deterioration. K&T wiring is considered high-risk by insurance companies — leading some companies to charge higher rates or flat-out deny coverage to homes with this style of wiring.
If you’re insuring an older home with aluminum or K&T wiring, your insurance company will likely perform an interior inspection shortly after your policy becomes active. Like any systems in your home, if your wiring has any visible signs of wear and tear that could prove hazardous to your home, your insurance company may require you to make repairs or upgrades, or risk being dropped from your policy.
If you can’t afford electrical upgrades to your property and need insurance right away to fulfill mortgage requirements, consider getting coverage through a surplus carrier. Surplus carriers specialize in insuring risks (such as homes with bad roofs or old electrical wiring) that are denied coverage by most insurers. While surplus lines coverage is a fine last-resort option, it’s typically expensive and lacks the coverage quality of standard homeowners insurance.
There are eight different types of homeowners insurance policies for various home types and coverage needs.
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