Electrical wiring is an essential yet often overlooked component of modern homes, hidden behind walls but vital to everyday comfort and safety. It’s easy to ignore until problems arise, prompting immediate attention.

Usually, electrical issues and repairs are covered under homeowners insurance policies. However, for older homes with outdated wiring systems, the insurance coverage is way higher. This happens due to the high chance these kinds of wiring have to be involved in potential fire hazards.

Even if your appliances function perfectly and no visible issues are present, unseen problems may lurk within your home’s electrical system. Here’s an in-depth look at how homeowners insurance interacts with electrical wiring issues.

Coverage for Electrical Wiring Under Homeowners Insurance

Typically, homeowners insurance covers electrical wiring repairs if damage or malfunctions result from sudden, accidental events covered by your policy. This includes hazards like fires or storms but excludes problems due to wear and tear, neglect, or outdated systems. Outdated electrical wiring systems possess all these issues, this is why it is not only costly, but sometimes impossible to cover homes with outdated electrical wiring.

Homes with older wiring systems such as knob and tube wiring or aluminum wiring are often considered higher risks. These properties might face higher insurance premiums or find it challenging to secure coverage due to the increased fire hazard these outdated systems present. Moreover, it can also be dangerous for homeowners to live in such conditions. This is why replacing your knob and tube wiring can be the best choice for homeowners in New Jersey.

Understanding Policy Limits and Exclusions

Coverage specifics can vary significantly depending on the age and condition of your home. For example, homes with knob and tube wiring, prevalent from 1850 to 1940, or aluminum and cloth-insulated wiring used from 1960 to 1970, often require updates to meet modern electrical standards and reduce risks.

Insurance companies may deny coverage if your home’s electrical system hasn’t been updated in over 40 years. You might also be advised to update the electrical wiring system entirely before you can cover it at all. This reluctance stems from the potential risks outdated systems pose, such as increased fire hazards or electrical failures. Once you upgrade your electrical wiring, you may freely ask your insurance company whether you qualify for a new wiring insurance.

Outdated vs. Modern Electrical Wiring

For homes with outdated wiring systems, obtaining the right insurance coverage is crucial. While some insurers might offer policies, premiums are typically higher to offset the greater risks.

Before purchasing or renovating an older home, it’s crucial to have a licensed electrician inspect the wiring. Updated electrical systems not only ensure safety but also potentially lower your insurance premiums by reducing risk. On the other hand, outdated systems often lead to increased premiums because they require additional risk management from the insurer.

Signs Your Home May Have Outdated Wiring:

• The property is over 40 years old without updated wiring;
• Presence of two-prong ungrounded outlets;
• Frequent issues with blown fuses or tripped circuit breakers;
• Sparks or shocks when connecting devices;
• Persistent burning smells or buzzing sounds from walls;
• Dimming or flickering lights without an apparent cause;

If your home was built over 40 years ago and its electrical system hasn’t been updated ever since, there’s a high chance that it was built with poor and unsafe wiring technologies. If your home still features original knob and tube, aluminum, or cloth wiring, consider updating to modern standards. Not only does this enhance safety, but it also can make obtaining and maintaining homeowners insurance easier and potentially cheaper.

According to the National Fire Protection Association, more than 350,000 home fires occur every year in the United States, the majority of which are caused by outdated electrical wiring systems. Instead of having to file a claim for a home fire, it is better to continuously update your home’s electrical wiring system by a reliable, affordable and licensed electrical contractor like Greenway Electric.

Does House Insurance Cover a Full Rewire?

Insurance for homes with these older systems can be more expensive or hard to obtain. Many insurers require an upgrade to modern wiring before offering a policy to mitigate the risks associated with these outdated technologies.

Homeowners insurance typically does not cover the costs of a full rewire unless necessitated by direct damage from a covered peril, such as a lightning strike. Rewiring due to degradation over time or as preventive maintenance is usually considered the homeowner’s responsibility.

Does House Insurance Cover Electrical Faults?

Electrical faults involve sudden equipment failure, such as transformers or generators. Most insurance companies will completely discharge coverage against these electrical faults. These policies exclude coverage for electrical faults, which are generally seen as preventable through proper maintenance. However, some insurers may offer additional coverage for these faults at an extra cost.

Does Homeowners Insurance Cover Electrical Panel Replacement? 

The electrical panel is the heart of your property’s electrical system, and its condition is crucial not only to your safety but also to the efficiency of your power supply. Coverage for replacing an electrical panel is often included if the malfunction results from a covered event and the system meets current safety standards. However, if the panel is outdated, insurers might require an upgrade before providing coverage.

If you are looking on how to install an electrical panel, how to wire an electrical circuit breaker panel or the cost to install a new electrical panel in your home, Greenway has you covered. We provide expert installation, timely repairs, and necessary upgrades at the most competitive prices to keep your system running smoothly and safely.

Knob and Tube Wiring Insurance Coverage

Obtaining insurance for homes with knob and tube wiring often comes at a higher premium, reflecting the increased risk associated with this older wiring method. Due to the significant fire hazards it presents, many insurers may charge more, or even refuse to insure homes that still utilize this type of system. This type of wiring is considered particularly hazardous due to a few reasons:

Insulation Risks: If knob and tube wiring is buried under insulation, it can cause dangerous heat buildup, leading to potential fires.

Deterioration of Insulation: Over time, the insulation around this wiring can decay and crack, leaving exposed wires that pose serious risks.

Lack of Grounding: Unlike modern systems, knob and tube wiring does not include a ground conductor, increasing the risk of electric shocks, particularly in high moisture areas like kitchens and bathrooms.

Unsafe Modifications: Older systems might have been altered inappropriately to meet modern electrical demands, which can lead to overheating and other electrical issues.

Because of these risks, replacing your knob and tube wiring may be necessary to secure homeowner’s insurance coverage.

Aluminum Wiring and Insurance

Homes with aluminum wiring, prevalent from the mid-1960s to mid-1970s due to its cost-effectiveness compared to copper, might also face higher insurance premiums. According to the U.S. Consumer Product Safety Commission, homes with aluminum wiring are significantly more likely to have fire hazards compared to those with copper wiring. The issues with aluminum include:

Oxidation: Aluminum wires oxidize quicker than copper, increasing the risk of overheating and electrical fires.

Durability Concerns: Aluminum is less durable and more prone to damage, affecting the longevity and safety of the wiring.

Given these factors, aluminum wiring is considered outdated and hazardous, similar to knob and tube wiring. Insurance companies often require an upgrade to safer, modern electrical systems before providing coverage.

Cloth Wiring and Its Implications for Insurance

Cloth wiring was popular through the mid-20th century due to its insulating properties. However, it lacks durability; over time, the cloth insulation can degrade and fall away, exposing live wires and significantly increasing fire risks. Despite its dangers, because many older homes still contain cloth wiring, some insurers may still offer coverage, typically at higher rates due to the increased risks.

However, for homeowners with any of these outdated wiring systems, it’s crucial to consider an electrical upgrade to enhance safety, comply with modern standards, and potentially reduce insurance costs. Upgrading not only improves the safety of your home but also ensures that your insurance coverage meets your needs without excessive premiums or denials of coverage.

Greenway’s Electric Solutions in New Jersey

At Greenway Electric in New Jersey, we specialize in both modern and outdated electrical systems. Whether you need an inspection, upgrade, or emergency repair, we ensure your electrical system is safe and efficient to protect you and your property from potential fire hazards. We can also assist you in understanding how electrical updates can impact your insurance coverage and what steps you should take for your specific requirements.

Contact us today at (973) 743-4040 for expert electrical solutions that enhance your home’s safety and compliance, potentially lowering your homeowners insurance costs.