Knob and Tube and Insurance

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pm I just recently closed on a 1920ish era house in Toronto. I had the offer conditional on inspection, and the inspector wrote in his report that there was no knob and tube visible, he did tell me that there probably was knob and tube in the house, and recommended that I wait to replace it when I renovate particular areas. For example when I renovate the kitchen, tear out all of the old wiring.

When I setup the insurance for the house, I told them there was no visible knob and tube, because that was what I was told by the inspector.

Now that I am in the house, I called in an electrician, because I wanted to get some quotes on having ungrounded plugs, switched to three prong grounded plugs. Anyways the electrician told me that basically almost every outlet was knob and tube, and he was going to work on quote to replace it.

My question is, what should I do now that I know that most of the house is knob and tube, should I phone up the insurance people and tell them this ?
If there were some kinda of electrical related insurance claim, would it be voided by the fact that I have knob and tube wire ? Should I just be quiet for now ?

I am going to get replaced, because I need to do it eventually, but was just curious on how quickly I should do that, and whether I should keep the insurance people in the loop.

Any thoughts ?

Thanks.
Posted by sduncan343 at 08:06 PM May 15th, 2009
pm I'm not an expert. However, if you told your insurance that you do not have knob and tube and you had a fire due to knob and tube wiring, my bet is you would not be covered. Hiding it from your insurance company will void your contract with them.

I believe knob and tube is no longer approved by the ESA, therefore, if you tell the insurance company you have knob and tube, they will not insure you unless you have it replaced.
Posted by mayble at 01:43 AM May 17th, 2009
pm Unless you gut the place you will always have K&T in a house of that vintage. Your inspector could have (should have!) easily checked your plugs and not being grounded is a pretty good indication of K&T. With that being said, I would be asking your electician how many other homes he has done like yours and who is responsible for fixing the damage to the walls, ceilings etc. Some outlets will be easy to access from the basement, but forget the lighting in many (all) rooms if don't want a serious reno bill. My realestate agent told me that with the right people doing the job, experienced in old homes, there can be minimal damage, but you're looking $100/fixture. So, 2 plugs, one wall switch, and an overhead lamp = $400 + parts. Not sure of the accuracy as the previous owners of my place redid about 50% and I can handle another 25%. For the remaining 25%, I'd say there's about 10% that cannot be done (overhead lights), and I'll get the rest done by someone else.

As for insurance, many companies will not insure you (did they ask about your plumbing?). This is what is so ***** -backwards about most insurance -- they'll insure you without ever seeing your home and when you make a claim then they send an inspector... to protect themselves. Find a company that deals with older homes and ask if they will come to see your home before quoting you.
Posted by synaptech at 02:25 AM May 17th, 2009
pm Call your insurance company and tell them you are looking to purchase a property with knob and tube. Ask what their policy is. Probably one of 3

1. They will not insure you period.
2. You have 90 days to remove it.
3. You have 30 days to remove it.

My company will not insure me under any circumstances but the policy varies by company. I think Allstate is one that has a grace period even for new policy holders.
Posted by nornet at 08:34 AM May 17th, 2009
pm

Originally Posted by nornet
Call your insurance company and tell them you are looking to purchase a property with knob and tube. Ask what their policy is. Probably one of 3

1. They will not insure you period.
2. You have 90 days to remove it.
3. You have 30 days to remove it.

My company will not insure me under any circumstances but the policy varies by company. I think Allstate is one that has a grace period even for new policy holders.
option 4. they insure you with full knowledge. I have knob and tube and while it is dated, I'd be far more concerned if my home had aluminum wiring. Our insurance came to see the home before they insured us and to generate an acurate quote.
Posted by synaptech at 02:02 PM May 17th, 2009
pm

Originally Posted by synaptech
option 4. they insure you with full knowledge. I have knob and tube and while it is dated, I'd be far more concerned if my home had aluminum wiring. Our insurance came to see the home before they insured us and to generate an acurate quote.
Which insurance company was this?
Posted by Ottomaddox at 02:07 PM May 17th, 2009
pm

Originally Posted by synaptech
option 4. they insure you with full knowledge. I have knob and tube and while it is dated, I'd be far more concerned if my home had aluminum wiring. Our insurance came to see the home before they insured us and to generate an acurate quote.
Oops, I missed that one . Naturally that's an option.
Posted by nornet at 04:25 PM May 17th, 2009
pm

Originally Posted by Ottomaddox
Which insurance company was this?
Wabisa Mutual
Posted by synaptech at 06:18 PM May 17th, 2009
pm Well part of the issue, is that I already have insurance that was based upon the inspection report that said there was no visible knob and tube.

Had I not got an electrician to look at the place, I theoretically still would just be going on what the inspection report had told me.

I guess I am curious if should now fill the insurance company in on what I found out. Basically tell them that I got an electrician to look at my place and they found knob and tube, and I am starting the process of replacing it ?
Posted by sduncan343 at 10:10 PM May 18th, 2009
pm

Originally Posted by sduncan343
Well part of the issue, is that I already have insurance that was based upon the inspection report that said there was no visible knob and tube.

Had I not got an electrician to look at the place, I theoretically still would just be going on what the inspection report had told me.

I guess I am curious if should now fill the insurance company in on what I found out. Basically tell them that I got an electrician to look at my place and they found knob and tube, and I am starting the process of replacing it ?
Well, there still is no visible k&t -- this is how the inspectors get away with it. You would really need to look at the info you signed to see if you stated there was no k&t. Problem is that if you have a problem with the house and you need to file a claim, they will send an inspector and they can deny the claim. Honestly, I find most insurance a scam because of this process. I would make a few calls and find a company that won't have an issue and then switch your company. One of the first questions a new company will ask is if your previous company cancelled your policy -- if yes, this will raise your rates and make it very difficult to get new insurance. So, if you tell your current insurance and they cancel then you have a problem.
Posted by synaptech at 10:32 PM May 18th, 2009
pm This happens quite frequently and it really does depend on your company. All companies have major concerns with Knob and Tube but some will be a little more flexible in giving you time to remove it while others will pretty much cancel your insurance within 15 days by registered letter.

Based on the information that your provided, you did not knowly lie to your company when the policy was written and you have proof based on the report from your inspector...so I wouldn't worry about being denied for a claim if one happens. Now, the issue is that since you are aware of the problem you need to notifiy them or your broker... if your with a broker you may have a better chance at getting some time to remove the wiring.

I work in the industry and use to be an underwriter so in most cases when this happened I would ask that a certified electrican come in and certify that the knob and tube was in "good" condition, if this was received then I would give the insured another 6 months to remove it or not renew the policy, which ever came first. For most companies this is the fairest way to do it in my opinion.

There are companies out there such as Chesterfield and Premier Marine that right substandard property insurance in Ontario so you might want to ask your broker. Word of warning though.. rates are high and coverage is lower than you would get with a regular insurance company!

Good Luck... as long as your honest and willing to remove it I don;t think that you'll have an issue.
Posted by peelhic at 10:52 PM May 18th, 2009
pm Thanks, I am with TD Meloche any thoughts on what their typical response is ?

As I have said I have already started the process of finding someone to get it removed.

I just don't want to have them cancel it and then I have no insurance. I am worried that would jeopardize my mortgage ?

This is my first house, I am unaware of the potential process.
Posted by sduncan343 at 11:38 PM May 18th, 2009
pm

Originally Posted by sduncan343
Thanks, I am with TD Meloche any thoughts on what their typical response is ?

As I have said I have already started the process of finding someone to get it removed.

I just don't want to have them cancel it and then I have no insurance. I am worried that would jeopardize my mortgage ?

This is my first house, I am unaware of the potential process.
I left TDM because of my experience with how they handled a car claim (broken windshield). The claim representative will tell you anything, but the underwritters make the decisions. Like I said, insurance is a scam. You have to tell the truth, but play the game smart and get their statements in writing.

IIRC, TDM was non-commital on the k&t issue. They were happy to insure based on a mini questionaire so that I could obtain the mortgage, but would then send an inpector after we moved in...

Originally Posted by peelhic
I work in the industry and use to be an underwriter so in most cases when this happened I would ask that a certified electrican come in and certify that the knob and tube was in "good" condition, if this was received then I would give the insured another 6 months to remove it or not renew the policy, which ever came first. For most companies this is the fairest way to do it in my opinion.
This is where is begins... first you'll need to find an electrician that will be willing to put his/her name on an insurance letter stating it's in "good" condition. Ask you insurance to please define "good". How many electricians do you think will be willing to put their name on the line to remove the insurance company's liability? Why doesn't the insurance company send their own electrician?

As for fair -- fair would be the insurance takes some basic steps to do its due dilligence. Any home 70+ years old is likely to have k&t.

Originally Posted by peelhic
as long as your honest and willing to remove it I don;t think that you'll have an issue.
You must be honest, but be realistic that the insurance company is not your friend and they are not there to help you. You owe it to yourself to find an alternative company that is fine with the k&t or will at least give you a reasonable amount of time to re-wire.
Posted by synaptech at 11:56 PM May 18th, 2009
pm

Originally Posted by sduncan343
Thanks, I am with TD Meloche any thoughts on what their typical response is ?

As I have said I have already started the process of finding someone to get it removed.

I just don't want to have them cancel it and then I have no insurance. I am worried that would jeopardize my mortgage ?

This is my first house, I am unaware of the potential process.
Check with your bank or your mortgage paperwork, but I believe you need house insurance in order to have a mortgage on your property. If you're denied insurance, it COULD be possible for the bank to demand repayment in full.

Originally Posted by synaptech

You must be honest, but be realistic that the insurance company is not your friend and they are not there to help you. You owe it to yourself to find an alternative company that is fine with the k&t or will at least give you a reasonable amount of time to re-wire.
True that. I found out a week before closing that my insurance co. would not insure my house with K&T. I negotiated a 30 remediation period with them for complete removal, along with the oil tank, and installation of a new gas furnace and A/C. It was a very expensive first month in the new house!
Posted by Brrr at 01:08 PM May 19th, 2009
pm Personally, I would contact the insurance company, explain that you just found out about the k&t, are making arrangements to remove it and ask for time to do so. Although you were honest when you took the policy, the fact is they would not cover you now if anything happened because you have k&t, whether you knew it or not. I think they would be less likely to cancel your policy if you are upfront about the situation now. Since you do know about the k&t and you do know it could be an issue for the insurance company, you should disclose it. I think they would be more likely to cancel your policy if they find out that you failed to disclose a material fact.
Posted by Cheap Cat at 06:05 PM May 19th, 2009

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