Multiple Policies on Property that has Knob and Tube Electrical

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Multiple Policies on Property that has Knob and Tube Electrical

Daniel Godbout
Investor · Oceanside, CA · Member since 2016 · 91 posts · 38 votes

Managed to get myself into a pretty good jam. Would appreciate any guidance. 

Back Story

I purchased an older (1920) multi-family duplex which has Knob and Tube electrical. It's got updated circuit breaker panels, but it still has some KnT. I know this is a mess and should have had the seller resolve or walked away, but I'm past the point of no return now as far as those contingencies go and now looking to work through this. As you probably know this is an insurance nightmare and pretty much unsupported across the board now. I've been shopping for different policies and scheduling contractors to bid on removing the remaining KnT. Hopefully I will get an idea of what this is going to run me pretty soon. I'll be a happy camper if I can get this done for under $10K, but I have no idea. Based on my research it seems like it could easily exceed that. Walls are plaster and both units are occupied. 

Insurance Questions

Was able to find only 2 options after talking to about 20 providers/brokers -

1) Property damage insurance covering up to the purchase price of the property. Would not include personal liability coverage.

2) Appears to be a commercial policy which has several stipulations, is quite expensive, and would require an inspection which comes with its own fee. This policy would cover everything if it indeed passes whatever the inspection includes. 

Is it feasible / do you have experience with having 2 different insurance policies on a single property? For example, one for personal liability and one for property?

I'm happy with the property damage insurance levels for the time being, but really concerned about not having personal liability coverage. Was thinking I could use option 1 + the personal liability coverage of the commercial policy. Is that a thing? 


If you made it this far, thanks for reading the long post! I really do appreciate you taking the time. 

Thank you!

Daniel 

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Most Popular Reply

Jason BottPro Member
Insurance Agent · Nationwide · Member since 2014 · 2k+ posts · 1k+ votes
9y

@Daniel Godbout separate property and General Liability policies is not uncommon for higher risk properties.  You should be able to find GL coverage for $100-$150 per year per $1M

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  • Jason BottPro Member
    Insurance Agent · Nationwide · Member since 2014 · 2k+ posts · 1k+ votes
    9y

    @Daniel Godbout separate property and General Liability policies is not uncommon for higher risk properties.  You should be able to find GL coverage for $100-$150 per year per $1M

    1Reply
  • Daniel Godbout
    OP
    Investor · Oceanside, CA · Member since 2016 · 91 posts · 38 votes
    9y

    Thanks @Jason Bott! Would like to chat with you a bit more. Going to send you a direct email. 

    0Reply
  • Mike Hanneman
    Investor · Coeur d'Alene, ID · Member since 2016 · 551 posts · 218 votes
    9y

    Your insurance company is charging you more because of knob and tube wiring? How did they find out it was even there? I have never heard of this... knob and tube is not against code depending on the circumstances.

    0Reply
  • Jason BottPro Member
    Insurance Agent · Nationwide · Member since 2014 · 2k+ posts · 1k+ votes
    9y

    @Mike Hanneman most insurance companies have an underwriting question addressing knob & tube.  If you know the building has knob & tube, and you state otherwise, you are giving the insurance carrier the opportunity to deny future claims for misrepresenting on the insurance application.

    0Reply
  • John Mocker
    Insurance Agent · Norwalk, CT · Member since 2016 · 2k+ posts · 1k+ votes
    9y

    Daniel,

    Sorry I am coming into the discussion late.  Are you flipping  the property?  Will you be remodeling the building and how extensive will it be (ie. Gut remodel or just cosmetic).  There may be some additional options property under a Builders Risk form but it depends on what is being done.

    The situation with having different policies for the Property and Liability is common with flips and also with non-standard dwellings (ie. vacant). 

    If the new property is in your name, your homeowners policy may let you extend the Liability to the new property.  Again, it depends on what is happening at the new building.

    0Reply
  • Daniel Godbout
    OP
    Investor · Oceanside, CA · Member since 2016 · 91 posts · 38 votes
    9y

    Hey @John Mocker thanks for jumping in! This is a buy and hold. Just underestimated the challenges with getting insurance coverage because of the knob and tube. My homeowners policy would not extend over because of this..

    It's very possible I'm being overly cautious and creating a problem for myself, @Mike Hanneman. Sometimes i'm being asked about it specifically as @Jason Bott suggested, but In many cases the insurance agents are not asking that detailed of a question. They might just ask if the electrical is updated because of the year the house is built. Also the pictures online for the property show newer circuit breaker panels which they might conclude means everything is updated. Every time I specifically ask, it's been a problem. 

    I want to be 100% sure that if I have a claim that the company is going to stand behind it. It's hard for me to believe that's the case just because they don't ask. What if I sign up through an insurance broker who just didn't verify the eligibility requirements with the company he or she is setting up the policy through? 

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  • Mike Hanneman
    Investor · Coeur d'Alene, ID · Member since 2016 · 551 posts · 218 votes
    9y

    I don't recomend lying if asked about it. It's just that I have had numerous properties and even more policies and I have never been asked or have seen a clause about this. I pay attention to electrical issues and clauses, being that I'm an electrician. 

    0Reply
  • John Mocker
    Insurance Agent · Norwalk, CT · Member since 2016 · 2k+ posts · 1k+ votes
    9y

    Daniel,

    In CT (probably similar in CA), in many of our company's Underwriting Guidelines it states that a Dwelling with Knob & Tube wiring is not eligible.  That is important because, if after any loss (not just something relating to the wiring), the Knob & Tube is discovered, the company can show that they would have never written it, had they known.  It is likely that the court will support that and the policy will be invalid.   

    1Reply
  • Daniel Godbout
    OP
    Investor · Oceanside, CA · Member since 2016 · 91 posts · 38 votes
    9y

    Thanks @John Mocker! That's exactly what I was concerned about would like to avoid. 

    @Jason Bott was able to point me towards a provider that covered the liability piece at a good price and confirmed that KnT was not a problem. 

    Thank you guys very much!

    Daniel 

    1Reply
  • John Mocker
    Insurance Agent · Norwalk, CT · Member since 2016 · 2k+ posts · 1k+ votes
    9y

    Glad it had a Happy Ending

    0Reply
  • Scott Tompkins
    Investor · Kailua, HI · Member since 2017 · 6 posts · 4 votes
    8y

    Are there insurance companies who are NOT a pain in the a$$ about knob & tube?  If so, PLEASE list them in this forum, so I can stop calling a hundred insurance reps.  I will start the list with 1 insurance company that does cover my knob&tube:

    USAA

    Thanks, y'all!

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