Charleston, South Carolina is well-known for its historic homes and rich history. Owning one of these historic home gems is a goal for many and a reality for a select few. If you are considering purchasing a historic home in Charleston, South Carolina, there are six important things you should know about Historic Home Insurance. When insuring a historic home in Charleston, it is not as simple as “getting a quote” and this process needs to be taken just as seriously as any other financial strategy used with your other investments.
1) Year built. Historic homes are classified into two categories; those built pre- 1945 and those built pre- 1900. Because of the unique finishes, features, and architecture during these periods, replacing or restoring these homes after a property loss can cost a considerable amount more than using today’s methods and materials. In general, it is said that the replacement cost should be 25% more if built between 1900-1945 and nearly 50% more for homes built pre-1900 when compared to homes built today.
2) Replacement Cost Value (RCV). As mentioned previously, the RCV of pre-1945 homes can be significantly greater than that of homes built today. Here is a list of a few items that greatly change the RCV: original construction replication, special finishes and materials, ordinance, law and code upgrades, architect and engineer fees, other specialist fees, B.A.R issues, time issues, licensing and permit costs, foundation costs, lead paint removal costs.
3) Claim settlement. All insurance policies have a claim settlement method. Most homeowners policies offer a replacement cost method, which means if your home is damaged or destroyed,
the insurance company will pay to restore it to its previous state prior to the loss. For pre-1945 homes, many insurance companies want to place a “functional replacement cost” (FRC) method on the policy. This means that they will replace your home using today’s methods. This can be a major issue if you are concerned with the historic features and aspects of your home and can devalue it greatly.
4) Historic Preservation List. If your home is on the historic preservation list then the city will require you to maintain much, if not all, of the original construction materials, however, your insurance policy might not read the same way. This can leave you with tens to hundreds of thousands of out-of-pocket expenses. This goes hand in hand with the claims settlement method and RCV of your historic home. Additionally, many insurance companies will simply not insure homes if they are registered on any type of historic preservation list.
5) Updates. Insurance companies that insure historic homes understand the uniqueness of them, but they also understand that these homes need updates to maintain their integrity. They will require a “Four Point Inspection”. This inspection focuses on the roof, HVAC system, wiring and plumbing. They want to make sure these four items are recently updated and/or in good working condition. Update years and conditions can play a major role in which companies may be willing to write insurance on a particular historic home.
6) Agency Partner. When constructing your insurance policy to protect your historic home and assets, you should work with an agency that specializes in insuring historic homes. If you simply go out looking for “quotes” and go with what is cheapest, you could be costing yourself tens to hundreds of thousands of out-of-pocket expenses and many headaches post-claim. While pricing is important, it should not be the focus point when insuring your historic home.
In summary, owning a historic home in Charleston can be a lifelong dream and goal. The last thing you want is to face issues and headaches should you have a property loss. Take the time and effort and make sure your home-owners insurance policy is written properly and provides the coverages you need to bring you back to a pre-loss state, and to help preserve your asset.
Mappus Insurance Agency has been insuring historic homes in Charleston since 1960 and works with the most reputable insurance companies that insure historic homes in coastal South Carolina. To start an action plan for the insurance for your historic home in Charleston, South Carolina look no further than below.