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RBM RBM is offline
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Default State Farm Insurance vs knob & tube wiring

I contacted a State Farm Insurance agent today to find out how that company
deals with homes that have K&T wiring. The replies they gave me were exactly
as I would have expected. Unfortunately, they were not willing to give me
the specific documents they read to me regarding this issue. The essence of
the document is that they want to know the percentage of K&T wiring in the
house, the condition of the K&T, and if it is adequate for the loads that
are on the wiring. There are notes indicating that they want certified
electrical inspectors or licensed electricians to make this determination,
depending upon the percentage of K&T in the building. Clearly they have an
issue with K&T , and the issue is primarily its age. They take a number of
factors in to determine if they will insure a house with this type of
wiring, but there is NO blanket denial due to K&T


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Default State Farm Insurance vs knob & tube wiring


"RBM" rbm2(remove wrote in message
...
I contacted a State Farm Insurance agent today to find out how that company
deals with homes that have K&T wiring. The replies they gave me were
exactly as I would have expected. Unfortunately, they were not willing to
give me the specific documents they read to me regarding this issue. The
essence of the document is that they want to know the percentage of K&T
wiring in the house, the condition of the K&T, and if it is adequate for
the loads that are on the wiring. There are notes indicating that they want
certified electrical inspectors or licensed electricians to make this
determination, depending upon the percentage of K&T in the building.
Clearly they have an issue with K&T , and the issue is primarily its age.
They take a number of factors in to determine if they will insure a house
with this type of wiring, but there is NO blanket denial due to K&T


Sounds very reasonable to me.


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Default State Farm Insurance vs knob & tube wiring

RBM (remove this) wrote:
I contacted a State Farm Insurance agent today to find out how that company
deals with homes that have K&T wiring. The replies they gave me were exactly
as I would have expected. Unfortunately, they were not willing to give me
the specific documents they read to me regarding this issue. The essence of
the document is that they want to know the percentage of K&T wiring in the
house, the condition of the K&T, and if it is adequate for the loads that
are on the wiring. There are notes indicating that they want certified
electrical inspectors or licensed electricians to make this determination,
depending upon the percentage of K&T in the building. Clearly they have an
issue with K&T , and the issue is primarily its age. They take a number of
factors in to determine if they will insure a house with this type of
wiring, but there is NO blanket denial due to K&T


State Farm Insures our home and never did the agent ask about knob and
tube wiring. Our home is 80 years old and we do have k&t, but only for
three ceiling lights and two outdoor porch lights. The remaining
electric is up to date. But never did State Farm ask about our wiring.
We live in a very small town if that makes a difference. Many old homes
around.

-Felder

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Default State Farm Insurance vs knob & tube wiring

Just so you know the K&T insurance issue is true heres a paste from
another board discussing it. I have NO connection with anything there,
and put some of this up as a reference to insurance rules today!

As you can see insurance has become picky recently....


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Posted by Jerry_in_OC_MD (My Page) on Tue, Nov 8, 05 at 16:55


We had the home inspection on the 1920 "Dutch Colonial Revival" that we

are in the process of purchasing.
The Inspector had a lot of concerns about the knob and tube wiring in
the house. Some, but not all of the electric is updated. He recommended

that we (or preferably the seller) have the wiring inspected and safety

tested by an licensed electrician before we take possession of the
house.


He mentioned that it might be tough to get a homeowners policy with the

electric in it's current state. Has anyone else had difficulty getting
an insurance policy for their home because of knob-and-tube?


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Posted by homemaker (My Page) on Tue, Nov 8, 05 at 18:11


Here in Ontario, if you have an existing policy, most insurers will
cover a newly purchased home with knob & tube wiring, and give you
30-60 days to disconnect and replace it.
This is a fairly recent change, for a couple of years, it was nigh on
impossible to get insurance for any house with knob & tube unless it
was with a high risk company.


First time home buyers are having more luck these days, but it often
means wearing out your dialing finger. Having an electrical certificate

stating that the wiring is safe and adequate and also advising what
percentage of the wiring is knob & tube may help.


If you have home insurance now, check with your current broker to see
how your company deals with knob & tube issues.


Hope this helps.


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Posted by joed (My Page) on Tue, Nov 8, 05 at 19:00


Here in Ontario I know of at least one person who was forced to replace

their K&T or their insurance would not renew.


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Posted by homemaker (My Page) on Tue, Nov 8, 05 at 21:49


I should have been clearer. Most insurers here will not take on a home
with knob & tube, or keep an existing property with K & T unless it is
disconnected and replaced within 30-60 days.
The only exceptions I know of have been elderly folks who really don't
use much power and tend to have no computers, VCR's, microwaves, and
who live much more simply than those of us with all kinds of fancy
appliances and toys. Electrician's letters advising that the wiring is
safe and adequate for the senior have satisfied many insurance
companies. Makes it tough for those buying the house if it's sold
though.


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Posted by bas157 (My Page) on Tue, Nov 8, 05 at 22:06


When I bought my house, USAA (insurance company) wanted to see the home

inspection report, which pictured some knob and tube wiring. They
wanted it replaced until I showed them better pictures which clearly
show the wiring was just a few pieces and the knobs, obviously hooked
up.


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Posted by kennf (My Page) on Wed, Nov 9, 05 at 14:21


Other than insurance, the other problem with K&T is that you aren't
supposed to insulate over it. So if you want to insulate the attic
better than 1920s standards, you may be out of luck.


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Posted by Vermonster (My Page) on Wed, Nov 9, 05 at 14:45


We were unable to get homeowners insurance with knob and tube
energized. Agreed to de-energize circuit and update. Policy is through
Vermont Mutual.
VT


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Posted by NancyLouise (My Page) on Thu, Nov 10, 05 at 8:01


We have a 100 year old home. When we recently switched insurance
companies, during the inspection one of the first questions the
inspector asked was if there was any K & T wiring. Luckily there
wasn't. It is a very real safety concern. I believe it may be more
difficult to get insurance because of it. Perhaps you can have monies
taken off the asking price of the home to get the home's wiring up to
code. It can't hurt to ask. NancyLouise


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Posted by Mom1993 (My Page) on Thu, Nov 10, 05 at 15:00


We own a 1920's house, had all original K&T wiring. Amica (who we have
used for 15 years) wouldn't insure the house - Fireman's fund would. We

are replacing almost all of the original electrical...Good luck!


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Posted by athomein1914 (My Page) on Fri, Nov 11, 05 at 20:36


Our house was almost entirely knob & tube when purchased and we had no
trouble insuring. (Allstate)
We've since rewired to code and insulated the attic. There was zero
insulation when we purchased our home.


Another insurance issue we've run into is insuring for replacement of
the historic home we have as opposed to a flat rate per square foot. I
find there is tremendous variation among insurance companies, and among

policies, and every so often I call around to update myself and my
home. You can insure beyond the "standard" to protect your
not-so-standard home.


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Posted by terryr (My Page) on Sun, Nov 13, 05 at 16:44


We have Grange Insurance on an 1896 house. They didn't ask us about
knob & tube, only about fuses vs. circuit breaker. We had 90 days to
upgrade to a CB.


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Posted by Bella_Design (My Page) on Mon, Nov 14, 05 at 23:23


I have a 1918 house in TN. It has some K&T in it as well. The main
breaker had two 100 amp fuses in it and was able to insure it with the
condition that I replace the fuse box with a circuit breaker, but none
of the wiring was a problem. The thing I had the most problem with was
that it is partially asbestos sided. Try Erie Insurance if they are
available in your area.

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Default State Farm Insurance vs knob & tube wiring

Beyond the issue of wether and at what cost someone CAN get homeowners
insurance.........

Wonder what percentage of shoppers would just ignore the home to avoid
the issue? for many buyers it may well scare them away?

my realtor said 90% of buyers TODAY want a home in move in condition,
later they will modify as needed. plus most purchase the most expensive
home they can afford leaving little money for things like rewiring.

all things to think about when one decides to sell a home.....

Of course the OP home is really low cost but it will be interesting to
see how the selling goes.....

I wish him only the best.



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Default State Farm Insurance vs knob & tube wiring


wrote:
Beyond the issue of wether and at what cost someone CAN get homeowners
insurance.........

Wonder what percentage of shoppers would just ignore the home to avoid
the issue? for many buyers it may well scare them away?

my realtor said 90% of buyers TODAY want a home in move in condition,
later they will modify as needed. plus most purchase the most expensive
home they can afford leaving little money for things like rewiring.

all things to think about when one decides to sell a home.....

Of course the OP home is really low cost but it will be interesting to
see how the selling goes.....

I wish him only the best.






Wonder what percentage of shoppers would just ignore the home to avoid
the issue? for many buyers it may well scare them away?


Depends on the market & the buyers.....a house in my neighborhood
(about 1700 sqft 3bd/2ba)

has been "re-done" inside & out (supposedly) by the previous two
owners...it sold for $862k

I assumed that ALL the K&T had been replaced and ALL the drain & fresh
water plumbing had bee replaced...

wrong! Two weeks after move in, I kept seeing plumbing trucks
there.....the new bath drain plumbing had been just atttached to the
old stuff

bottom line..... in spite of the high price they stll needed to have
the drain plumbing replaced AND a new house to sewer connection...they
also replaced the fresh water supply (street to house)

They wanted an old house with the charm factor so that in spite of any
comments on the inspection report they still bought the place (after a
short bidding war)



while I was in the basement giving them my 2cents on their plumbing
situation I noticed that only the kitchen & new bedroom had new NM
.....I was shocked to see the rest of the house is still K&T!

luckily my new neighbors are DINK's so they have $'s for rework when
they need it

I have K&T in my house as well but the wire is in amazifng shape...I
recently moved an outlet & pulled the wire from the wall just check the
condition. The stuff looked & felt great....nothing like the
condition one sees in a swtich box.

My goal is to remove all & replace with THHN/THWN in flex or emt.
Already have a modern Square D QO main panel & subs...so its just a
matter of time.



cheers
Bob

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Default State Farm Insurance vs knob & tube wiring

I have stae farm and a 1935 house. No electrical inspection- in fact
no interior inspection at all


wrote:
RBM (remove this) wrote:
I contacted a State Farm Insurance agent today to find out how that company
deals with homes that have K&T wiring. The replies they gave me were exactly
as I would have expected. Unfortunately, they were not willing to give me
the specific documents they read to me regarding this issue. The essence of
the document is that they want to know the percentage of K&T wiring in the
house, the condition of the K&T, and if it is adequate for the loads that
are on the wiring. There are notes indicating that they want certified
electrical inspectors or licensed electricians to make this determination,
depending upon the percentage of K&T in the building. Clearly they have an
issue with K&T , and the issue is primarily its age. They take a number of
factors in to determine if they will insure a house with this type of
wiring, but there is NO blanket denial due to K&T


State Farm Insures our home and never did the agent ask about knob and
tube wiring. Our home is 80 years old and we do have k&t, but only for
three ceiling lights and two outdoor porch lights. The remaining
electric is up to date. But never did State Farm ask about our wiring.
We live in a very small town if that makes a difference. Many old homes
around.

-Felder


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Default State Farm Insurance vs knob & tube wiring

I have stae farm and a 1935 house. No electrical inspection- in fact
no interior inspection at all


wrote:
RBM (remove this) wrote:
I contacted a State Farm Insurance agent today to find out how that company
deals with homes that have K&T wiring. The replies they gave me were exactly
as I would have expected. Unfortunately, they were not willing to give me
the specific documents they read to me regarding this issue. The essence of
the document is that they want to know the percentage of K&T wiring in the
house, the condition of the K&T, and if it is adequate for the loads that
are on the wiring. There are notes indicating that they want certified
electrical inspectors or licensed electricians to make this determination,
depending upon the percentage of K&T in the building. Clearly they have an
issue with K&T , and the issue is primarily its age. They take a number of
factors in to determine if they will insure a house with this type of
wiring, but there is NO blanket denial due to K&T


State Farm Insures our home and never did the agent ask about knob and
tube wiring. Our home is 80 years old and we do have k&t, but only for
three ceiling lights and two outdoor porch lights. The remaining
electric is up to date. But never did State Farm ask about our wiring.
We live in a very small town if that makes a difference. Many old homes
around.

-Felder


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Default State Farm Insurance vs knob & tube wiring

I have stae farm and a 1935 house. No electrical inspection- in fact
no interior inspection at all


wrote:
RBM (remove this) wrote:
I contacted a State Farm Insurance agent today to find out how that company
deals with homes that have K&T wiring. The replies they gave me were exactly
as I would have expected. Unfortunately, they were not willing to give me
the specific documents they read to me regarding this issue. The essence of
the document is that they want to know the percentage of K&T wiring in the
house, the condition of the K&T, and if it is adequate for the loads that
are on the wiring. There are notes indicating that they want certified
electrical inspectors or licensed electricians to make this determination,
depending upon the percentage of K&T in the building. Clearly they have an
issue with K&T , and the issue is primarily its age. They take a number of
factors in to determine if they will insure a house with this type of
wiring, but there is NO blanket denial due to K&T


State Farm Insures our home and never did the agent ask about knob and
tube wiring. Our home is 80 years old and we do have k&t, but only for
three ceiling lights and two outdoor porch lights. The remaining
electric is up to date. But never did State Farm ask about our wiring.
We live in a very small town if that makes a difference. Many old homes
around.

-Felder


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Default State Farm Insurance vs knob & tube wiring

RBM wrote:
I contacted a State Farm Insurance agent today to find out how that
company deals with homes that have K&T wiring. The replies they gave
me were exactly as I would have expected. Unfortunately, they were
not willing to give me the specific documents they read to me
regarding this issue. The essence of the document is that they want
to know the percentage of K&T wiring in the house, the condition of
the K&T, and if it is adequate for the loads that are on the wiring.
There are notes indicating that they want certified electrical
inspectors or licensed electricians to make this determination,
depending upon the percentage of K&T in the building. Clearly they
have an issue with K&T , and the issue is primarily its age. They
take a number of factors in to determine if they will insure a house
with this type of wiring, but there is NO blanket denial due to K&T


What do you want? That wiring is very old, but that in itself does not
mean not safe. It was put in when codes were a lot weaker and when demands
on wiring was far less than today. What they are asking for is exactly what
any homeowner, perspective buyer or resident should want to know. Sounds
like they got it right.

--
Joseph Meehan

Dia 's Muire duit





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Default State Farm Insurance vs knob & tube wiring

On Tue, 5 Dec 2006 16:59:23 -0500, "RBM" rbm2(remove
wrote:

I contacted a State Farm Insurance agent today to find out how that company
deals with homes that have K&T wiring. The replies they gave me were exactly
as I would have expected. Unfortunately, they were not willing to give me
the specific documents they read to me regarding this issue. The essence of
the document is that they want to know the percentage of K&T wiring in the
house, the condition of the K&T, and if it is adequate for the loads that
are on the wiring. There are notes indicating that they want certified
electrical inspectors or licensed electricians to make this determination,
depending upon the percentage of K&T in the building. Clearly they have an
issue with K&T , and the issue is primarily its age. They take a number of
factors in to determine if they will insure a house with this type of
wiring, but there is NO blanket denial due to K&T



Just to share with you what I was told about K & T that also scares
insurance companies. No Equipment ground. This means any modern
(last several decades) applance has to have it's 'safety' design,
defeated to plug in your outlets unless you install GFCI's on the
circuits. Either way, insurance companies can be parinoid that
someone will die.

Just telling you what I was told.

tom @ www.NoCostAds.com


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As is the case I'll bet in about 99% of policies written. They don't ask.
You don't tell. No problem.

--
Steve Barker



wrote in message
oups.com...
RBM (remove this) wrote:
I contacted a State Farm Insurance agent today to find out how that
company
deals with homes that have K&T wiring. The replies they gave me were
exactly
as I would have expected. Unfortunately, they were not willing to give me
the specific documents they read to me regarding this issue. The essence
of
the document is that they want to know the percentage of K&T wiring in
the
house, the condition of the K&T, and if it is adequate for the loads that
are on the wiring. There are notes indicating that they want certified
electrical inspectors or licensed electricians to make this
determination,
depending upon the percentage of K&T in the building. Clearly they have
an
issue with K&T , and the issue is primarily its age. They take a number
of
factors in to determine if they will insure a house with this type of
wiring, but there is NO blanket denial due to K&T


State Farm Insures our home and never did the agent ask about knob and
tube wiring. Our home is 80 years old and we do have k&t, but only for
three ceiling lights and two outdoor porch lights. The remaining
electric is up to date. But never did State Farm ask about our wiring.
We live in a very small town if that makes a difference. Many old homes
around.

-Felder



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Default State Farm Insurance vs knob & tube wiring

that's almost ALWAYS the case. If they look at all, it'll be on the outside
just to verify a building exists.

--
Steve Barker


wrote in message
ups.com...
I have stae farm and a 1935 house. No electrical inspection- in fact
no interior inspection at all


wrote:
RBM (remove this) wrote:
I contacted a State Farm Insurance agent today to find out how that
company
deals with homes that have K&T wiring. The replies they gave me were
exactly
as I would have expected. Unfortunately, they were not willing to give
me
the specific documents they read to me regarding this issue. The
essence of
the document is that they want to know the percentage of K&T wiring in
the
house, the condition of the K&T, and if it is adequate for the loads
that
are on the wiring. There are notes indicating that they want certified
electrical inspectors or licensed electricians to make this
determination,
depending upon the percentage of K&T in the building. Clearly they have
an
issue with K&T , and the issue is primarily its age. They take a number
of
factors in to determine if they will insure a house with this type of
wiring, but there is NO blanket denial due to K&T


State Farm Insures our home and never did the agent ask about knob and
tube wiring. Our home is 80 years old and we do have k&t, but only for
three ceiling lights and two outdoor porch lights. The remaining
electric is up to date. But never did State Farm ask about our wiring.
We live in a very small town if that makes a difference. Many old homes
around.

-Felder




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Default State Farm Insurance vs knob & tube wiring


Either way, insurance companies can be parinoid that
someone will die.

Just telling you what I was told.

tom @ www.NoCostAds.com


WELL THINK ABOUT THIS! $100,000 policy perhaps 500 bucks.

lets imagine a house fire totaling building and thats common today few
are home during working hours......

after the company covers basic costs how many 500 buck policies does it
take to cover the replacement or major repair cost of a single house
fire?

realize that 500 bucks probably covers the structure and all
possesions.

probably 150 grand

I have a friend who had a house fire 135 grand structure only.........

there isnt a unlimited pot of money, insuring bad risks.... to cover
the excess costs premiums have to go up

Who volunteers to pay more?

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Default State Farm Insurance vs knob & tube wiring

In article om,
says...

Either way, insurance companies can be parinoid that
someone will die.

Just telling you what I was told.

tom @
www.NoCostAds.com

WELL THINK ABOUT THIS! $100,000 policy perhaps 500 bucks.

lets imagine a house fire totaling building and thats common today few
are home during working hours......

after the company covers basic costs how many 500 buck policies does it
take to cover the replacement or major repair cost of a single house
fire?

realize that 500 bucks probably covers the structure and all
possesions.

probably 150 grand


Probably a bit more -- that $500 premium also includes Loss of Use
coverage to cover your costs to rent elsewhere while the house is being
rebuilt, it includes Separate Structures coverage for fences and
outbuildings. A standard homeowners policy with $100,000 of dwelling
coverage can cost the insurer $190,000 in payments for a total loss.

And that doesn't include their costs to investigate and settle the
claim. That can be a real ordeal, figuring out the value of every item
that was destroyed, investigating the cause of the loss, investigating
who might be responsible (faulty wiring work, defective appliance, etc.)

Overall, a total loss of a $100,000 house could easily cost the insurer
$200,000 or more. So yes, they do have an incentive to categorize risks
and decide whether your $100,000 house should cost $500 to insure, or
$750.

--
is Joshua Putnam
http://www.phred.org/~josh/
Braze your own bicycle frames. See
http://www.phred.org/~josh/build/build.html
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Default State Farm Insurance vs knob & tube wiring


wrote:
In article om,
says...

Either way, insurance companies can be parinoid that
someone will die.

Just telling you what I was told.

tom @
www.NoCostAds.com

WELL THINK ABOUT THIS! $100,000 policy perhaps 500 bucks.

lets imagine a house fire totaling building and thats common today few
are home during working hours......

after the company covers basic costs how many 500 buck policies does it
take to cover the replacement or major repair cost of a single house
fire?

realize that 500 bucks probably covers the structure and all
possesions.

probably 150 grand


Probably a bit more -- that $500 premium also includes Loss of Use
coverage to cover your costs to rent elsewhere while the house is being
rebuilt, it includes Separate Structures coverage for fences and
outbuildings. A standard homeowners policy with $100,000 of dwelling
coverage can cost the insurer $190,000 in payments for a total loss.

And that doesn't include their costs to investigate and settle the
claim. That can be a real ordeal, figuring out the value of every item
that was destroyed, investigating the cause of the loss, investigating
who might be responsible (faulty wiring work, defective appliance, etc.)

Overall, a total loss of a $100,000 house could easily cost the insurer
$200,000 or more. So yes, they do have an incentive to categorize risks
and decide whether your $100,000 house should cost $500 to insure, or
$750.

-- EXACTLY and people shop for lower premiums....


With car insurance why insure a repeat DUI customer whn lots of
regular safe drivers are available?

cover up K&T by saying you dont have it or disquising it by say getting
it out of basement? have fire they likely deny the claim.........

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Default State Farm Insurance vs knob & tube wiring


wrote:
Just so you know the K&T insurance issue is true heres a paste from
another board discussing it. I have NO connection with anything there,
and put some of this up as a reference to insurance rules today!

As you can see insurance has become picky recently....


[...BIG snip....]

But, while I didn't read every word, I did scan the tales, and it
appears to be a minority that were actually rejected for K&T (I think I
saw one). There were some that required a changeout of an old fuse box
for a breaker, but certainly not a blanket proscription against
insuring adequate K&T as you have been saying.

In another response, somebody else pointed out the same thing I've been
trying to get you to realize on the subject of agents -- commerce in
general is regulated by state laws/regulating bodies and those have
different rules/laws that make assuming a specific policy in one state
is uniform across the entire US simply not true. In the specifics of
homeowners insurance, with the "veritable plethora" of underwriting
entities available besides the majors, that one can't find an
underwriter for a particular situation is really pretty small except
for certain very widespread situations like building in a flood plain
or similar.

Just chill, point out there _might_ be an issue raised at renewal or
new policy time and realize the whole world doesn't look like your
little corner of PA...

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Default State Farm Insurance vs knob & tube wiring

wrote:
wrote:
In article om,
says...

....

WELL THINK ABOUT THIS! $100,000 policy perhaps 500 bucks.

....
... how many 500 buck policies does it take to
cover the replacement or major repair cost of a single house fire?

....
probably 150 grand


....
Overall, a total loss of a $100,000 house could easily cost the insurer
$200,000 or more. ...

....
cover up K&T by saying you dont have it or disquising it by say getting
it out of basement? have fire they likely deny the claim....


OK, assume $200k/loss. It would take 400 policy premiums to make up
the direct loss. Assuming the ancillary costs are 100% of that would
still be under 1000 paid premiums _per annum_ to make up for the
one-time infrequent loss. I don't have data at hand, but I'd venture
the percentage of US homes having a full loss annually is far less than
one in a thousand. (Only to point out things may not be so bleak for
the underwriters as you seem to be trying to make us think... )

Where homeowners' underwriters tend to have problems is not in
individual home policies but in areas prone to widespread disasters
such as flood, hurricane, earthquake, etc., where a whole region gets
hammered at one time. Unfortunately, as they were reminded in the Gulf
and FL the last few years, one can not apply the individual recurrence
interval per household in a region independently for common-cause
events and remain actuarially (sp?) sound over the long haul.

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But, while I didn't read every word, I did scan the tales, and it
appears to be a minority that were actually rejected for K&T (I think I
saw one). There were some that required a changeout of an old fuse box
for a breaker, but certainly not a blanket proscription against
insuring adequate K&T as you have been saying.


READ AGAIN!! While most had at minimum to upgrade to circuit breakers
new main entrance the vast majority couldnt even get insurance.......
Or reported friends HAD to get rid of K&T

I could break it down while 2 or so had no trouble most did or knew
someone who did.

You should at least try reading and digesting the paste so you can talk
more intelligently about the issue...........



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OK, assume $200k/loss. It would take 400 policy premiums to make up
the direct loss. Assuming the ancillary costs are 100% of that would
still be under 1000 paid premiums _per annum_ to make up for the
one-time infrequent loss. I don't have data at hand, but I'd venture
the percentage of US homes having a full loss annually is far less than
one in a thousand. (Only to point out things may not be so bleak for
the underwriters as you seem to be trying to make us think... )

Where homeowners' underwriters tend to have problems is not in
individual home policies but in areas prone to widespread disasters
such as flood, hurricane, earthquake, etc., where a whole region gets
hammered at one time. Unfortunately, as they were reminded in the Gulf
and FL the last few years, one can not apply the individual recurrence
interval per household in a region independently for common-cause
events and remain actuarially (sp?) sound over the long haul.


nevertheless the premiums MUST cover all costs and some profits so the
business can remain in operation. lets not forget theres probably a LOT
of overhead running a insurance companies, agents fees, commisions,
underwriters, investigators to find fraud, let alone inspecting and
managing repairs so people cant steal by covering stuff up.

anyone who has had a claim knows what a hassle between contractors,
insurance company and mortage company...........

now most probably SHOP for lower cost coverage, who volunteers to pay
more to cover fires and perhaps shock hazards from old obsolete K&T
wiring

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Default State Farm Insurance vs knob & tube wiring

You see Haller, what dpb, myself and others are unsuccessfully trying to
impress upon you, is that YOU shouldn't make blanket statements like "Sate
farm will NEVER insure a home purchased today with K&T I asked my
agent.........."

wrote in message
ps.com...
But, while I didn't read every word, I did scan the tales, and it
appears to be a minority that were actually rejected for K&T (I think I
saw one). There were some that required a changeout of an old fuse box
for a breaker, but certainly not a blanket proscription against
insuring adequate K&T as you have been saying.


READ AGAIN!! While most had at minimum to upgrade to circuit breakers
new main entrance the vast majority couldnt even get insurance.......
Or reported friends HAD to get rid of K&T

I could break it down while 2 or so had no trouble most did or knew
someone who did.

You should at least try reading and digesting the paste so you can talk
more intelligently about the issue...........



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Default State Farm Insurance vs knob & tube wiring

In article .com,
says...

OK, assume $200k/loss. It would take 400 policy premiums to make up
the direct loss. Assuming the ancillary costs are 100% of that would
still be under 1000 paid premiums _per annum_ to make up for the
one-time infrequent loss. I don't have data at hand, but I'd venture
the percentage of US homes having a full loss annually is far less than
one in a thousand. (Only to point out things may not be so bleak for
the underwriters as you seem to be trying to make us think... )


The latest statistics I have say that of 100 homeowners, one will have a
total loss over 20 years. So yes, total losses are a very infrequent
risk.

But they're also only a very small part of what insurance ends up paying
for -- there are a lot of $1000 burglary claims and $10000 kitchen fires
for every total loss, and they come out of the same premium pool as
total losses.

If an insurance company can identify particular classes of homes that
are more likely to have losses, and if their actuaries can develop
reliable estimates of the extra risk, they can implement appropriate
surcharges so that lower-risk policyholders aren't subsidising higher-
risk policyholders.

If the insurance company can identify hazards that increase risk, but
can't come up with reliable actuarial estimates of the risk, then it's
hard to develop an appropriate surcharge and get it approved by
insurance regulators. That's where the company tends to either decline
to insure that type of risk or accept it without a surcharge.


--
is Joshua Putnam
http://www.phred.org/~josh/
Braze your own bicycle frames. See
http://www.phred.org/~josh/build/build.html
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wrote:
....
the direct loss. Assuming the ancillary costs are 100% of that ...

....
nevertheless the premiums MUST cover all costs and some profits so the
business can remain in operation. lets not forget theres probably a LOT
of overhead ...


I just gave them 100% over a claim and showed on that basis using your
postulated numbers it only takes an annual claims rate less than otoo
0.1% to make it up. Double or triple that and actual experience is
still far below that level, I am certain for individual losses.

....

anyone who has had a claim knows what a hassle between contractors,
insurance company and mortage company...........


Well, my experience has been pretty much the direct opposite -- I have
had claims paid promptly, fairly, and all dealings have been very
professionally managed. I think it has more to do with making a
selection of an insurer with a good reputation than anything else. Of
course, I've not had a complete loss (thank goodness) but I really have
no qualms that if I did the resulting angst would be compounded by the
insurance company who underwrites our coverage.

We have been through sizable losses owing to storm damage over the last
several years in this small city where two years running small
tornadoes and major hail storms required over 80% of all roofs in the
entire town to be replaced along with sizable other wind-related damage
to the extent of several homes and businesses were completely totalled.
In the ensuing aftermath of the several boards I sit on, losses for
their facilities were as high as in the $100k range and up each year
and we had _no_ difficulties whatsoever with any of them. Of all the
stories in town, I am only aware of one particular contracted adjusting
firm that was initially very penurious in their evaluations and invoked
the ire of many who had their coverage from the firm which hired this
particular adjusting firm. After several complaints to the local agent
and confirmation by him that the adjustments did not seem in line with
actual damages and others, this firm was replaced by the underwriter
and each case revisited. I am sure there were a few cases that were
not settled to the complete satisfaction of the homeowners as is
inevitable, but certainly, overall, the situation was handled quite as
well as could be expected.

now most probably SHOP for lower cost coverage, who volunteers to pay
more to cover fires and perhaps shock hazards from old obsolete K&T
wiring


Well, as was noted in a thread in one of your previous jousting bees on
the subject, there is little definitive data that really proves
conclusively that K&T _by itself_ really raises the risk that much.
So, overall, it is highly doubtful K&T is raising your rates very much
as compared to other factors. If you're concerned that it is, then I
suggest you continue to shop for the underwriters who _do_ proscribe
against it (if you can find any) and their rates should reflect their
improved actuarial experience and be lower than their competitors to
account for it.

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Default State Farm Insurance vs knob & tube wiring

In article . com,
says...

With car insurance why insure a repeat DUI customer whn lots of
regular safe drivers are available?


If your actuaries have a good handle on the added risk a repeat-DUI
customer represents, and your insurance commissioner will approve
appropriate surcharges, you insure the repeat-DUI customer because he's
likely to be just as profitable at very high premiums as a safe driver
at very low premiums.

cover up K&T by saying you dont have it or disquising it by say getting
it out of basement? have fire they likely deny the claim.........


Nobody has been suggesting misrepresentation or concealment.

But in many parts of the country, many insurance companies don't even
*ask* about K&T wiring. They may ask a more general question, like "is
any part of the wiring obviously indadequate or in need of
replacement?" They may ask whether the home has fuses or a breaker
panel.

Why would they do that? Various reasons.

If a large share of local housing stock still has some K&T circuits,
refusing to insure them would cost the company more business than simply
charging a premium that includes the slightly higher risk.

The average homeowner is not an electrician and can't be expected to
know much about the home's wiring, especially what's inside the walls.
Asking them about K&T wiring wouldn't necessarily get useful
information.

If the company does interior inspections on older homes, the inspector
is likely to be a more reliable source of information than the customer.

My own homeowner's insurance application *did not ask about K&T at all.*
The interior inspection was ordered based on the age of the home, the
inspector looked over the wiring, checked what loads were on what
circuits, looked for signs of overheating in outlets and the panel, etc.
The company approved the insurance based on the application and
inspection.

If the inspector missed some awful wiring flaw that causes a fire,
there's no basis for denying a claim -- I fully answered all their
questions, they took advantage of their opportunity to inspect the risk,
they decided to accept the risk.

--
is Joshua Putnam
http://www.phred.org/~josh/
Braze your own bicycle frames. See
http://www.phred.org/~josh/build/build.html


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wrote:
In article .com,
says...

....

the percentage of US homes having a full loss annually is far less than
one in a thousand. ...


The latest statistics I have say that of 100 homeowners, one will have a
total loss over 20 years. So yes, total losses are a very infrequent
risk.

But they're also only a very small part of what insurance ends up paying
for ...
If ... can identify ... and ... develop reliable estimates of the extra risk,
... can implement appropriate surcharges ...

If ... can identify hazards that increase risk, but
can't come up with reliable actuarial estimates of the risk, then it's
hard to develop an appropriate surcharge and get it approved by
insurance regulators. That's where the company tends to either decline
to insure that type of risk or accept it without a surcharge.

....

Precisely, and well put. I would have thought the 1 loss/2,000
homeowner-years still somewhat high, but certainly in the realm of
reality. I was only doing the pseudo-actuarial excercise to
demonstrate that while speaking of $100-200k losses sounds absolutely
huge, when spread over the risk pool, there's a lot of revenue
providers who don't have the claims to make up for it. And, granted,
there are many more smaller claims than total losses, but hallerb seems
fixated on the one so I simplified the argument. (Also, note that I
gave them the benefit of assuming 100% "overhead" in the major loss
category in part as knowing there are other claims as well as simply an
estimate of costs associated only w/ payout of total-loss claims) As
you note, the actuarial data are the key thing and having sound data
soundly applied are imperatives to maintaining a healthy position as an
underwriter (and having sufficient assests to "ride out" the inevitable
short-term statistical fluctuations, of course. ).

As to the specific subject risk at hand in the current discussion, I
suspect (although I'll grant I don't have any inside information) that
the situation is a combination of not sufficient solid data that the
particular item itself was a root cause combined with insufficient
losses from claims where the item could have been at fault to make it
come to the forefront in an evaluation of where to put actuarial
research investment and the knowledge that it is a relatively small
fraction of all homes already and that percentage is going down all the
time. Consequently, it is simply not an area that has sufficient long
term payback to the insurance industry to invest in the necessary
effort to develop rate premiums specifically against K&T. So, as you
also note, they resort to either the occasional or regional/local
declining to underwrite or, perhaps, require the inspection that it
meets the grandfathered code requirements.

Still, at least here, it has been far more common for the actual
requirement to be replacing fuse boxes rather than sound K&T wiring in
all the old houses that have been refurbished as part of the local
revitalization project refurbs. Most of these will eventually get
completely rewired as part of a major reconstruction effort, but that
may take the new owner some 10 years or more and what we're doing is
getting first-time homeowners into something they can afford and that
is safe _first_. In order to do this, it makes no sense to put
resources into something that isn't a problem. In some cases, the
condition of the wiring has been so poor as to make that a part of the
mandatory first stage reconstruction to make the house safe for
habitation, but often it has not been.

Anyway, I've said all there is to be said, and more....
As I think I noted elsewhere, it seems that the industry in general
forgot about common-cause in a period of low activity in the SE US and
in a competitive fervor grossly underevaluated true risk from a
catastrophic event. It will take some time for these effects to be
absorbed and a new equilibrium to be achieved. But that type of risk
estimation is totally apart from individual homeowners.

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Its also possible a insurance company sees more OVERALL claims in homes
with K&T wether or not the wiring was at fault.

so they refuse to insure or surcharge heavily?

remember they are in the business to make money.

perhaps older homes have more water damage or other troubles?

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Thinking of people I know who had fire.

A neighbor of my wifes sister in MD. They came home put car in garage
and friends picked them up for dinner. when they returned home there
was no home total loss after 8 month fight with insurance company. I
was in part of this home it was truly gone. they only reused
foundation. fire caused by vehicle in garage.

good friends had fire, cat knocked over lamp they were home. $135,000
damage to a 90K home insurance on structure ONLY, their roof was bad,
insurance company sold new company wouldnt cover them. forced place
coverage on structure only.

my next door neighbors car caught on fire in driveway, fire went up
front of home. realtively minor damage about 40 grand, mostly to
elminate smoke odors.

a good friend had trees hit home during terrible storm, 30 thousand
damage for roof structure and minor water damage.

the above gals next door neighbor, fire destroyed home total loss.
about 150 grand plus possesions


a old friends home hit by lightning many years ago, about 30 grand
damage minor fires thruout home.

Its amazing I didnt realize how many people I know had home disasters

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When you are walking around and look up, is there a dark cloud following you
around? All these sad disasters seem to have YOU in common. LOL!

CWM


getting older I am near 50 gives you time to see stuff like
this...........

and gain lots of curious info on home repairs cause so muchg stuff has
broke

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