Home Insurance Issues
Insurance issues with your home?
If you have any of the following issues in your home, it could cause the sale of your home to collapse after the building inspection.
Most insurance companies have raised the level of acceptable standards for certain components of a home.
Aluminum wiring was extensively used in homes between 1965 and 1976. Problems have been reported from the overheating and failure of aluminum wiring terminals resulting in insurance
concerns. The signs of these problems are: the discoloring of the wall receptacle, flickering lights, or the smell of hot plastic insulation. Although not all aluminum wiring is hazardous,
the safety issues with aluminum wire usually involve the 110-volt circuits used for outlets and lights. In some cases connections worked loose and the wire overheated, which sometimes
caused a fire. Consequently, the use of 110-volt aluminum wiring was abandoned, and older homes with this type of wiring typically warrant upgrades at connection points or junction boxes.
The use of aluminum wiring is common and acceptable for 220-volt circuits, provided the connected device is rated for aluminum wire. Heating equipment, air conditioners, clothes dryers
and electric stoves are examples of acceptable hardware. As long as the wire ends are protected with a corrosion resistant compound, concern over the presence of aluminum wire may not
be justified. In fact, the majority of electric utility companies use aluminum cable for their main service lines. In all likelihood, the power lines coming to your home are aluminum.
What to do To confirm the safety of the aluminum wire in a home you may be purchasing, have a home inspector and electrician meet at the property to confer and to compare findings.
It is recommended that a qualified electrical contractor inspect the electrical system, including all connections. The insurance company may insist on a complete electrical
inspection by a certified electrician, rather than a report from a home inspector.
100 Amp Power Service Minimum
Insurance companies will not insure a home with less than a 100 amp power supply. If the home has a 70 amp service a new service will need to be installed. Usually this will cost
at least $4000.
Knob and tube wiring
Knob and tube wiring, also known as open wiring, was used in Canadian homes for almost 50 years, beginning in the early 1900s. Older homes may still have it in service, fortunately
parts are still available for maintenance purposes. Knob and tube wiring, properly installed, can still provide many more years of service. However, it does raise insurance concerns.
The issues started with changing lifestyles. Most old homes do not have as many electrical circuits as a new one. To get around this, some homeowners installed additional outlets
or new circuits and tied it into the old wiring, rather than starting a new circuit at the electrical panel.
Often, when a circuit became overtaxed and 15 amp fuses were constantly blowing, homeowners put in heavier fuses to stop the problem. Having 25 or 30 amps in a wire not designed
to handle it causes the wire to overheat resulting in the wire and the insulation becoming brittle. This in turn, led to safety issues.
Some homeowners also did their own renovations, adding outlets but connecting them into the old wiring without making the proper connections. Knob and tube wiring, on its own, is
not inherently a problem. Some argue it does not have a ground conductor, but that is true of any wiring installed prior to 1960. The ground conductor — or "third prong"
— is necessary if you are plugging in appliances that have a 3-prong plug.
What to do if the home involved in your transaction has knob and tube wiring, it is recommended that you follow these guidelines:
Have a qualified electrical contractor check the knob and tube conductors for sign of deterioration and damage. Some insurance companies may ask for a specific electrical contractor
report. The general home inspection report will also identify visible electrical safety concerns in the electrical wiring. Knob and tube conductors should be replaced where exposed
conductors show evidence of mechanical abuse and or deterioration, poor connections, overheating, or alterations that could result in overloading.
Oil leaks and spills from residential fuel tanks have cost Canadian insurance companies and homeowners a lot of money in recent years. Insurance companies now balk at insuring homes
with older fuel tanks, and some provinces have passed strict new regulations governing when the tanks must be replaced.
Real estate transactions can be put at risk if you purchase a property with an underground fuel oil tank and are denied homeowners insurance. If you find that an existing tank has not
been registered, remedial action may cost thousands of dollars.
Home buyers have also expressed concern over home insurance policies being denied or being unable to obtain home insurance because of the age of both under and above
ground oil storage tanks. A home with an exterior oil tank older than 15 years, or an interior tank older than 25 years, usually will not be insured.
The problem is that many oil tanks are corroding from the inside out, so the failure is not readily visible. This often occurs from condensation that builds up inside the tank.
Since oil is lighter than water, the water goes to the bottom of the tank and causes corrosion. The first sign of a bad tank could be an odor of oil in the air. There might be rust or
corrosion where the legs are welded to the tank. It could also be the fuel filter that begins to leak or a nozzle plugging that could be a symptom.
Insurance companies are concerned that an old oil tank will leak and spill hundreds of liters of heating oil into the home, or into the ground. Spilled oil can quickly contaminate
soil and groundwater.
If the leak finds its way into a sump pump or floor drain, the spill will undoubtedly make it a very expensive cleanup. With outside storage tanks, where rust and corrosion
are more common, a spill can contaminate the soil or make its way into nearby streams or rivers.
Indoor Oil Tanks
Many home oil tanks are designed and built for indoor use. Indoor oil tanks will generally last longer and improve the efficiency of oil-fired appliances. Indoor storage tanks are
less likely to spill and do not emit an odor. An indoor oil tank should be installed where it can be easily inspected but will not be damaged by normal household activities.
If possible, the tank should be surrounded with a low curb and dike to contain any leaked oil. The tank should never be placed tight against a wall as this can cause the tank to rust.
The fuel supply line should be covered and filtered to protect them from damage. Storing objects on top of the tank could potentially lead to damage.
Outdoor Oil Tanks
Outdoor tanks should be placed at least 15 metres from any well. To prevent rust, the tank's exterior should be covered with enamel paint. The tank should also be
supported properly with a non-flammable base of concrete or patio stones to prevent it from shifting or falling over. Wood is not recommended as it can burn, rot and retains
water, which causes the tank to rust. The tank should be sloped slightly toward the drain, and should never be in contact with a wall. To allow for changes in ground level,
the oil burner supply line should have a horizontal loop before entering the building. The line should be sloped toward the building to prevent water collection. If possible,
the oil filter should be placed inside the home because collected water can freeze and cause splitting. The supply line can be installed through the top of the tank to protect
against breaking the line and draining the tank. If frost heaving or ground settling causes a tank to move, it should be leveled properly.
Underground Oil Tanks
There is concern many underground fuel oil tanks have reached the end of their useful lives and are beginning to corrode, rust and leak. Increasing homeowner insurance
claims resulting from leaking fuel oil tanks are very expensive and can lead to high insurance rates, or even refusal of coverage. It is a homeowners legal responsibility
to properly maintain the oil tank and clean up any spills or leaks that may occur. An underground tank is tougher to inspect, but the biggest tip-off it may be leaking is if
your home is using more fuel than normal. Just one liter of leaked oil from an underground tank can contaminate one million liters of drinking water.
How to check if an underground oil tank is leaking
Because they are buried, it is difficult to detect a leaking tank. Some underground tanks may leak for years without owners realizing it. If oil consumption suddenly goes up
the tank may have sprung a large leak.
There are companies that test underground tanks for leaks. Call the fuel supplier to help find underground tank testing companies.
What to do if an oil tank is leaking
Suspect a leak in an underground oil tank? Call a TSSA registered fuel oil contractor to help find and stop the leak and clean up any leaked fuel oil. In Ontario, homeowners
are also required to call the Spills Action Centre of the Ministry of Environment at 1-800-268-6060.
Insurance companies may also have resources of information.
Underground tanks are required to be upgraded with specific leak and spill prevention equipment or be removed.
What to do with unused underground oil tanks? An unused underground oil tank must be removed and all contaminated soil must be cleaned. Underground tanks are required to be removed by
TSSA registered fuel oil contractors. When an underground tank is removed, the soil around the tank must be assessed for contamination and all contamination cleaned.
Wood burning appliances
Although there is nothing like the warm glow of a wood fire on a cold winter's night, fireplaces and wood stoves present insurance issues.
Has it been installed according to the official code? It's one of the things a home inspector will usually pay a lot of attention to. If you are thinking of selling your home
with a fireplace or wood stove, you could have it inspected first. There are a variety of professionals who are trained in wood unit safety, including:
- The local fire department
- building inspector
- wood heat retailer
- chimney sweep
If you plan to install a new chimney or wood-heating appliance, or replace one wood stove with another, many municipalities require a building permit.
If that's the case, the building inspector may automatically inspect the installation as part of the service.
There are five points the insurance company will be concerned with:
- Is it an approved unit? It should be certified by Underwriters' Laboratories of Canada (ULC), The Canadian Standard Association, CSA) or Warnock Hersey.
- Did a professional install it?
- Was a building permit issued?
- Are the clearances up to the latest Building Code and Fire Code?
- There is no "grand fathering" of this requirement.
- Is the venting system proper? Ideally there should be no elbows in the stovepipe and it should be as short as possible.
- Having a properly installed wood heat system and making it safer means the best possible premium for insurance coverage. You should inform your insurance company or
broker whenever a change is made to the wood heat system. This includes adding or changing a wood stove, modifying a chimney - anything that may influence the safety of the wood heat
- There are a number of basic safety steps required for the proper maintenance of a wood burning appliance you should also be aware of.
- Have it cleaned on a regular basis.
- Inspect it at least twice a year for corrosion.
- Have a smoke detector and a fire extinguisher nearby.
Vermiculite Insulation Containing Asbestos
Vermiculite is a naturally occurring mineral that is mined around the world. From the early 1920's to the mid-1980's, vermiculite was used as cheap, easy-to-use housing
insulation, but has not been sold for that purpose since 1990.
It has been recently discovered that certain batches of vermiculite insulation sold in Canada may contain trace amounts of asbestos. When breathed in, asbestos dust can
cause serious lung diseases and cancer.
If left undisturbed and enclosed behind a wallboard, a floorboard or in an attic, there is very little risk to health. Never attempt to remove vermiculite insulation yourself.
Consult a professional contractor who is certified for working with asbestos before attempting to remove or dispose of the product.