Insurance cancelled on century-old farmhouse. What are the alternatives now?

[California]

Insurance will be cancelled on this simple century-old farmhouse. It's on short piers with no perimeter foundation (in earthquake country), all plumbing and the knob & tube wiring was farmer-installed without regard to code. The 1960's electrical upgrade installed a 200 amp Federal Pacific (fire hazard, uninsurable) entry panel.

It isn't our primary home, that's a conventional home in town. We've enjoyed keeping the farmhouse, barns, even the windmill, same as they must have looked long before my grandparents retired here in 1950. The Gravenstein apple orchard is still run commercially, operated by a neighbor, same as a century ago, in contrast to all the neighbors who have gone to wine grapes. We like this little piece of California as it was pre-war, its a vanished culture.

What are the alternatives to find insurance for this grossly non-code-compliant house and outbuildings?

 

[MossRoad]

Bummer.

Have you looked into the costs of bringing it up to code?

Did they give you a list of things that had to be done before they'd insure it again?

Do you really need insurance on that structure? Can you self-insure?

 

[MoKelly]

Look into Assigned Risk Insurance. Maybe California requires companies to offer Assigned Risk Policies on properties.

Those policies exist so people can get insurance on stuff typical insurance companies won’t cover.

It is quite expensive - but at least it’s available insurance.

Good luck.

MoKelly

 

[plowhog]

One option is that California offers a "fair plan" insurance plan so you can insure properties that are otherwise un-insurable. It's very commonly used with forested properties now, since they are considered high fire risk. Cancellation of insurance at high-fire-risk properties in CA is rampant.

Some nearby neighbors went from under $1,000 per year with traditional insurers, to over $6,000 per year when they were forced onto fair plan upon receiving a cancellation from their traditional insurer. But it was their only option other than being uninsured. And they could not be uninsured since these neighbors had mortgages.

 

[California]

The agent briefly mentioned Insurance Pool or something, mandated by the state. Apparently its minimal coverage and expensive. That may be where we end up. The only important aspect of insurance for me is extensive liability coverage since there are tractors, orchard ladders, trees to fall out of, even the house wiring, that worst case could create vast liability.

Moss, just putting an earthquake-code foundation under this house would cost more than putting a Manufactured Home on the same 14 x 50 footprint, after repairing everything that broke as the house was lifted. The first remodel was to add an indoor bathroom, the wall in the bathroom facing the kitchen, is exterior lapboard. After that both ends of the house were extended to reach the present 50 ft length. It would probably break apart at each of the addition joints if it were lifted. And surely bust up all the old plumbing, wiring, roofing, and the exterior decks on 3 sides that are supported by the house, that would need to be removed to reach the foundation.

20 years ago when I inherited it Dad strongly recommended bulldoze and start over, there's no way to remedy all the flaws. I'm getting old myself, I thought I could keep patching things to last my generation. I can afford to self-insure if we lost the house to fire or earthquake, but I'm not willing to go without good liability insurance.

I simply like the pre-war simple farm atmosphere here that couldn't be duplicated authentically. Here's one example:
Photo - the windmill on the water tower. The gravity-feed tank was in the top story until the late 90's. It appears that the barn equipment stalls were subsequent additions to this water tower.

 

[two_bit_score]

Curious which insurance company and how long your insurance had been in place with them?

Were they even offering replacement cost coverage on that policy? Or, was it Actual Cash Value only? If so, you might be better off just starting a fund to self insure because the depreciated value would be near nothing. That is unless the policy contained a liquidated demand clause and the loss was complete destruction, un-rebuildable.

Many companies are declining renewals for RCV now for all kinds of reasons, or even none at all, just getting out of the RCV business. Of course, the premiums are not really reduced much, if any, if they do offer to continue coverage at the ACV value. I was talking to an insurance regulator just recently about this, it's getting more widespread.

Neighbor found out the hard way that his 'cheaper' policy (his agent was pushing) doesn't provide RCV on his roof and at 20-25 years old he gets almost nothing for the roof damaged by hail. And, the company is even contesting if it is a covered claim. Neighbors all around got roofs in the last 3 weeks.

 

[California]

Plowhog, you reminded me of the fire-zone cancellations issue. I'm downwind of the huge - most expensive in history - fire at Santa Rosa a couple of years then another similar fire a year later. Cold charcoal and ash coated everything, air so thick with smoke that I bailed out back to our principal home over in the central valley. So I expect I'm in the marginal fire hazard zone and that factors into cancellations, also.

 

[California]

Curious which insurance company and how long your insurance had been in place with them?

Were they even offering replacement cost coverage on that policy? Or, was it only? If so, you might be better off just starting a fund to self insure because the depreciated value would be near nothing.

After reading this, I read the existing policy. It is Replacement Cost. Actual Cash Value would be zero if you used the tax depreciation schedules that apply to rental property.

And I remember Dad was in crisis for weeks, months, finding anyone who would renew during his last years here, late 90's. He finally found this good farm insurance policy from the same agent and company that insures much larger farms nearby. I've had them for 20 years now. They are legitimate but as you said, insurance companies are now tightening up their standards. Especially in high fire risk areas like this county.

 

[34Willys]

Wow! The water tower reminds me of my Great-Grandma's house in Sebastopol. I think it was on Mill Station Rd. Last time I was there would have been very early 70's as I recall. Maybe 10 years old. Mom says the House is still there and has been 'updated', but they kept all the 'built ins' and glass door knobs.
Thanks for the stroll down memory lane.
California was a great place to grow up and live.
Patrick

 

[California]

Wow! The water tower reminds me of my Great-Grandma's house in Sebastopol. I think it was on Mill Station Rd. Last time I was there would have been very early 70's as I recall. Maybe 10 years old. Mom says the House is still there and has been 'updated', but they kept all the 'built ins' and glass door knobs.
Thanks for the stroll down memory lane.
California was a great place to grow up and live.
Patrick

I'm a few minutes from your Great-Grandma's place. You would be shocked at how much development has been done since the 70's. Mostly wealthy San Francisco weekenders and retirees tearing out the old orchards and putting in vineyards for the 'ambiance'. I think orchards are nicer, it's like being in a forest.

 

[ponytug]

You are in a tough spot, sorry. Check with the state for the pool insurance and see what you think. It might be possible to insure the orchard and ranch aspects separately as commercial insurance. Fire, earthquake, and replacement value are going to be very tough to get.

With last years fires, many insurers are heading for the exits for awhile, just like post Loma Prieta. Too many liabilities and too many unknowns to forecast well, avoiding which is the essence of insurance.

I once helped jack up an old 1730ish cabin and helped rebuild it. It all depends on what you are up for with adventure and cost, and I can understand that it might be more than you want to take on. The cabin got done over five years or so with lots of volunteers, and ended up gorgeous.

Knob and tube isn't necessarily unsafe. It depends on the insulation and whether it was done well.

All the best, Peter

 

[CalG]

Why does such a structure need insured?

Liability yes. Coverage? I say no.

 

[Diggin It]

Fence the house and keep the fence locked. Insure the property and vehicles, etc. with the house excluded.

 

[ning]

Why does such a structure need insured?

Liability yes. Coverage? I say no.

Agree here.
You should check if you can get a liability-only policy.

 

[California]

You are in a tough spot, sorry. Check with the state for the pool insurance and see what you think. It might be possible to insure the orchard and ranch aspects separately as commercial insurance. Fire, earthquake, and replacement value are going to be very tough to get.

With last years fires, many insurers are heading for the exits for awhile, just like post Loma Prieta. Too many liabilities and too many unknowns to forecast well, avoiding which is the essence of insurance.

I once helped jack up an old 1730ish cabin and helped rebuild it. It all depends on what you are up for with adventure and cost, and I can understand that it might be more than you want to take on. The cabin got done over five years or so with lots of volunteers, and ended up gorgeous.

Knob and tube isn't necessarily unsafe. It depends on the insulation and whether it was done well.

All the best, Peter

Thanks for the comments. Looks like the expensive Pool is the only alternative, if I keep the existing farmhouse. Insuring house and business separately sounds like its worth exploring.

Knob & Tube was an insurance disqualifier, but its not troublesome so far as I can see so long as its not disturbed. Bend a wire and the insulation crumbles off.

Lots of volunteers and five years, I wish. I have neither. I'm beginning to seriously consider putting a manufactured home on this 14 x 50 footprint to make my elder years easier.

 

[California]

If Pool (assigned risk) coverage is expensive and basically insures nothing, ie would pay 'Depreciated Value' (zero) in the case of a loss, then I will go for liability only. Liability is the only part I consider essential.

 

[Diggin It]

While you're looking around, ask if anyone will insure it as an outbuilding or storage building for a reduced rate ... roughly what it could cost to put a manufactured place on it if lost.

 

[California]

Something just occurred to me ... If I can afford to self-insure (I can), then I can afford the increased cost of a Pool (assigned risk) policy. I'm now thinking of that excess cost as a fee for maintaining continued use of this non-standard antique I have here.

My thinking may change. This is all new to me and I'm exploring choices.

 

[Slowpoke Slim]

Can you look into getting it registered as a historical site? If it's predominantly as it was 100 years ago, maybe it holds a historical value as a pre-war or pre-depression era American farm operation?

Else I would just worry about getting liability insurance on the farm operation side and leave it at that.

 

[MossRoad]

I understand the need for liability insurance. When my father passed away, the insurance company would not renew if no one was living in the house. They were more worried about the liability of the 90' escarpment in the back yard than the cost of the structure. We had to get a high cost liability policy that was something like $2500 every 6 months.

As for the sentimentality of the house, if your dad said tear it down, that should relieve you of any guilt should you go that route. Our father encouraged us to sell his house, as it was an architectural experiment that he built for proof of concept and testing different building techniques. That eased my mind quite a bit VS trying to justify keeping it for sentimental reasons.