Learn why the age of investment properties is a significant underwriting factor.

Discover risk factors often tied to older investment properties that affect insurability.

Cracking? Peeling? Overhanging? Energy glitches? If you’re over age 60, you may be familiar with one or more of these conditions. A thorough check-up by a healthcare provider may be in order. However, if it’s your investment property that is showing these signs, then you may face difficulty obtaining affordable or adequate insurance coverage.

Underwriting guidelines are tightening up for older investment properties, commercial and residential. Building age is a number that frequently arrays with increased risk of damage due to fire, windstorm, hail, and tornado. More and more, roof age and condition are being scrutinized for signs of wear and tear and deterioration, such as missing, cracking, or curling shingles. Commonly associated with older roofs, these characteristics increase a structure’s susceptibility to costlier damage resulting from severe weather. Some companies are declining to quote any property with an older roof, or offering reduced coverage terms for buildings with roofs older than 15 years.

Insurance companies are also interested in the overall exterior condition of investment properties, as this impacts both property and liability insurance claims. They look for indications of property neglect, such as peeling paint, exposed wood, sagging gutters, and missing siding. They pay attention to the land too, taking note of overhanging trees, scattered debris, and proximity to hazardous properties.

The electrical system in older investment properties is of particular concern to insurance underwriters. Fuse boxes are an outright no for some companies, as they present increased fire risk due to power overload or malfunction. Stab-Lok breakers or panels are widely considered to be unsafe. They have a history of failing to trip during short circuits. Properties where they are in place may be uninsurable. It is recommended that a licensed and qualified electrician replace outdated electrical systems with an appropriate modern system that complies with local code.

On their own, some of the features pointed out here have more potential to contribute to extensive or total property loss than newer, safer, sturdier, up-to-date repairs and replacements. This is an underwriting downside, as the outlook is “not if, but when”. Most companies are not willing to place themselves in the position of covering an accident waiting for a happen.

Age is more than a few creaks and cracks. It is a key consideration in evaluating the insurability of commercial and residential investment properties. If you own an investment property of any age, routinely inspect it and perform regular maintenance. Make sure that all repairs and upgrades conform to local building codes. If you are considering the purchase of an older investment property or one that is in disrepair, contact your insurance agent beforehand to discuss potential insurance-related problems.

Richey-Barrett Insurance is a Trusted Choice Independent Insurance Agency experienced in obtaining insurance for commercial and residential investment properties.