Still missing:
Links that show a hazard of K&T wiring in contact with insulation.
Links that show the fire hazard of K&T wiring.

http://www.executive-homeinspections.com/?D=40- Hide quoted text -

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hey cool, heres a quote paste from this site

More importantly perhaps, some insurance companies are now refusing to
provide home owners insurance on houses with existing knob & tube
wiring.

It can not be run in or under insulation. This often happens when
outside walls or attics are insulated. Old wiring was installed in
open spaces so that it would stay cool. The insulation around the
wires was made of rubber that burns at a relatively low temperature.
If surrounded by house insulation, the wires will not cool and could
heat up enough to burn. It is important that if an old house is to be
insulated that any knob and tube wiring be re-wired first.