January 24th - 2013

Insuring a heritage home can be challenging

The market for heritage homes – although not as frenetic as the condo boom -- has rapidly gained interest in recent years.

by Robert Hulley

The market for heritage homes – although not as frenetic as the condo boom -- has rapidly gained interest in recent years.

As Tom Cruickshank wrote in Old Ontario Houses, "Fortunately, public opinion is no longer indifferent to the fate of our architectural heritage, and there is a whole new generation of enthusiasts for whom restoring an old Ontario dwelling is the stuff of dreams."

Pitfalls abound when real estate salespeople list and sell heritage properties, but buyers may also face unforeseen problems when they seek adequate insurance on these historical treasures. Insuring a heritage home is like trying to fit a square peg into a round hole. The round hole is the thousands of standard newer homes insured each year without difficulty. The square peg is the fact that every heritage home is unique and many are one of a kind. Heritage homes have been around for many years, during which time building materials and construction methods have changed considerably.

However, insurance providers aim to replace a home in “like kind and quality”. As the Insurance Bureau of Canada points out, “some insurers may not offer guaranteed replacement cost coverage on a heritage home, even as a policy add-on.” This is confirmed by an Ontario government publication - Insurance and Heritage Properties, which asks, “What if I want the original features of my property to be replaced in case of damage?” The response is, “If this is what you want, make sure you're properly covered. Insurance coverage for this depends on the degree of risk you and your insurance company are prepared to share. The age, quality and condition of your building will affect what coverage is available and the premium charged.”

For these reasons, insuring a heritage home is quite different from insuring other properties. However, some may be surprised to learn that the Ontario Heritage Act does not require a designated building that is accidentally damaged by fire or other causes to be restored to its former style and fashion. Yet, in many cases, owners of designated homes go to great lengths to restore the cherished features of their home. Therefore, for those who share this view, having adequate and proper insurance coverage is of the utmost importance.

Real estate brokers and salespeople who list heritage homes should try to round the square peg as much as possible by gathering as much relevant information on the property as they can. This includes the level of maintenance, repairs and upgrades, age, fire protection measures and, if available, an insurance valuation and photographs of the heritage attributes. Before listing the property, REALTORS® might consider shopping around for an experienced insurance broker to whom clients may be referred. These steps, in addition to taking some of the mystery out of insuring a heritage home, may help to ensure that both the buyer and seller do not encounter any problems when making an offer and closing.

For more information, see the following:

Robert HulleyRobert Hulley is past president of the Credit-Humber branch of the Architectural Conservancy of Ontario, a retired Toronto REALTOR® and a frequent writer on heritage issues.”

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