Finding a plasterer. Figuring out what to do with 13 fireplaces, all closed. Deciding how and when you can afford to replace the wiring.
Those are common problems for the owner of an old house that can be solved with time, learning and money.
There is another problem, adequate insurance coverage, that demands an expert. Self-insurance is possible but hardly practical. Few old-house owners have $100,000 in a savings account, waiting for a disaster to strike the house. If, they have any money, it is more than likely invested in the house.
The insurance on a house is generally called homeowners insurance, fire and theft, or hazard insurance. If there is a mortgage on your old house, the insurance is there as much to protect the lender (bank, savings and loan association, or mortgage company) as it is to make sure you have a place to live in when the fire is over. If your house were to be destroyed and you had no insurance, you would also have very little incentive for making your monthly mortgage payment. If you abandoned the shell, the lender would not collect the money and could be stuck with a sizable loss. That is the reason insurance is part of PITI, the real estate jargon for Principal-Interest-Taxes Insurance, the monthly payment.
Other provisions of the homeowners policy provide personal liability protection. If the next-door neighbor spends six weeks in traction after tripping on your front steps, the personal liability section provides funds for medical bills and legal fees. The amount of the coverage and the type of coverage will vary with the policy, so check with your agent to make sure that you have what you need. Make sure that any out buildings also are covered. The theft provisions should be adequate for the contents. Antiques or jewelry may require special policies of their own. Review your policies. After the burglar has left or the fire department has finished mopping up is not time to discover you need more protection.
These are sensible suggestions and useful information for the owner of any type of house.
Old-house owners, as usual have a special problem. A basic assumption of homeowners insurance does not hold for old houses. Insurance companies assume that the market value (the price a buyer would pay) of a house is equal to the replacement value (the cost to rebuild the house). Insurance policies are generally written for an amount adequate to replace the house if it is damaged or destroyed. An old house may have a replacement cost much higher than its market value or a market value much higher than its replacement cost. For example, few Georgetown rowhouses would cost as much to rebuild as the possible selling price. Other old houses, especially those with unique woodwork, cabinetry, plasterwork, or other decorative elements done by hand, could not be replaced even for the total market selling price.
The difficulty for the old house owner has been matching coverage with replacement cost, getting the right amount of insurance, neither too little nor too much.
One company, St. Paul Fire and Marine Insurance, recently introduced a special policy for the owners of historic and is marketing it in the Washington area. Any privately owned, owner-occupied house that is nominated for or listed on the National register of Historic Places or is in an historic district recognized by city, state, or the federal government, can qualify.
An owner can choose the amount of coverage from a minimum of $30,000 to 100 percent of the replacement cost or as low as 40 percent. Special insurance coverage is available for expensive decorative or structural features. Both provisions require a deductible so that the owner shares part of the risk.
There is also special personal liability protection for the owner who wants to show the home in an open house, garden or homes tour or who must open the house during the year because of preservation easements. The provision covers three open houses where a fee is charged and an unlimited number of free open houses. Having one of the tourists trip on your historic doorstep and sue you for all your money or the kids' college education is possible. You cannot presume that your personal liability protection applies to such tours, and additional coverage for these events can be very expensive.
While there is no minimum age for the houses covered by these policies, the company does require a comprehensive inspection of the home before the policy will go into effect. They are concerned that the property be well maintained, especially those areas that are particularly susceptible to fire, the electrical system and the heating and cooling system.
St. Paul's program was the first that recognized the growing market of historic-house owners. Additional companies will come into the market as they recognize that money can be made there.