Heritage homes are sought after for their romantic appeal and historic charm, but they can also come with unexpected costs and complications.
Older buildings typically require more work, ongoing upkeep and a level of attention that owners of newer properties rarely face.
Insuring these buildings is no different, according to the Insurance Bureau of Canada. The features that make a heritage property distinctive are often the same features that make it more complex – and usually more expensive – to insure. Older structures are more likely to have underlying issues, and formally designated heritage properties are often subject to stricter rules on how they can be repaired or rebuilt after a loss.
Coverage is generally available, but placing it usually involves more documentation, more questions and closer interaction with brokers and underwriters than is common for standard homes.
Not every intermediary or carrier is comfortable with designated or very old buildings. Brokers and agents with heritage or “character home” experience tend to have a clearer view of which insurers will consider these risks and what information will be required.
Market participants said owners of heritage properties are typically advised to work with brokers who can demonstrate a track record in placing older buildings and who have access to multiple markets, including any specialist programs that focus on heritage risks. In many cases, however, owners should still expect to do much of the legwork in assembling building and regulatory information.
From an underwriting perspective, a recently built home is relatively straightforward: modern wiring, plumbing, heating and insulation, all installed to contemporary codes. By contrast, a house that has stood for a century or more can present a patchwork of construction methods, materials and systems.
Insulation may range from traditional batts to sawdust, newspaper or animal wool. Electrical systems can still include knob-and-tube wiring. Plumbing and heating may rely on materials and technologies now regarded as higher risk. Insurers cannot tell which elements have been upgraded without detailed information.
As a result, underwriters commonly seek comprehensive documentation on structure, services, past renovations and any engineering or specialist reports. Industry bodies such as the Insurance Bureau of Canada have developed “risk prospectus” templates for heritage and older buildings to help ensure that all essential data are captured for insurers.
Regulatory requirements for heritage buildings are often layered. Provincial legislation usually provides the overall framework, but municipalities typically decide which properties or districts are designated as “heritage” and specify what must happen following a loss.
In some municipalities, bylaws require that façades, windows, roofing and other architectural features be replicated as closely as possible using original or equivalent materials. Elsewhere, there may be more flexibility to use modern substitutes that preserve the appearance while reducing cost. These differences can materially affect the estimated rebuild value and, in turn, premiums, IBC said.
For that reason, brokers and owners are generally expected to obtain confirmation of a property’s heritage status and any applicable bylaws or site-specific agreements and to provide those documents with submissions to insurers.
While exterior character is often preserved, insurers increasingly expect critical life-safety and loss-prevention systems in older buildings to meet modern standards. That can involve replacing knob-and-tube wiring with copper wiring, upgrading aging plumbing to copper or approved plastic, modernizing heating systems and adding or improving fire and carbon monoxide detection.
Viewed from a market perspective, such upgrades can help move a property from “borderline” to acceptable for more carriers, particularly in a period of heightened scrutiny around fire and water losses. They may not eliminate higher premiums associated with heritage status, but they can improve insurability and, in some cases, moderate rate increases.
Cases periodically surface of owners who say they were unable to secure insurance for a heritage home. Industry sources noted that, in some instances, additional factors such as undisclosed home-based businesses, short-term rentals, major unrepaired defects or prior claims activity have played a role.
Because heritage properties often involve larger sums insured and potentially costly rebuild obligations, underwriters are particularly sensitive to incomplete or inconsistent information. Non-disclosure of material facts can result in cancellations, non-renewals or claim denials. Market participants stress the importance of full disclosure about occupancy, commercial use, significant past damage and known building issues.
Many heritage buildings in Canada were constructed close to rivers, lakes or historic waterfronts at a time when proximity to waterways was a commercial advantage and long-term flood risk was poorly understood. With overland flooding and extreme rainfall now more frequent in many regions, those locations can present challenges separate from any heritage designation.
In practice, insurers may be more concerned about overland flood, storm surge or groundwater risk than about the age of the structure itself. Where owners encounter difficulties in obtaining full coverage for a heritage property near water, the location and flood exposure are often key constraints, the bureau added.
Advisers also said that, in such cases, discussions with brokers typically focus on the availability and scope of overland flood and sewer backup coverage, as well as mitigation measures such as sump pumps, backwater valves and grading changes that might improve the risk profile.
Replacement-cost estimates for heritage properties can be particularly sensitive to inflation in construction labor and materials, as well as to the availability of specialist trades. For that reason, insurers may seek to re-evaluate sums insured for older or designated buildings more frequently than for standard homes.
Periodic reassessments may also take into account upgrades that reduce risk, such as new roofs, modern wiring or improved fire protection. While those changes do not guarantee lower premiums, they can help offset some of the upward pressure on costs associated with older construction and heritage requirements.
Stakeholders noted that dedicated support is available for owners of heritage properties.
The National Trust for Canada, a member-based charity focused on saving and renewing historic places, provides guidance on conservation and has worked with partners to develop a heritage home insurance program aimed at designated properties and older homes.
The Trust and other organizations also publish materials on insurance challenges for heritage owners, including checklists, Q&A documents and guidance on understanding a building’s history and construction, IBC said.
