Beware of insurance requirements for older houses

July 24, 2013

in Property

Property: HousingInsurance companies have developed strict requirements before they will provide cover over older houses particularly in relation to the quality of the electrical wiring.

What is considered an older house? There is variation amongst the insurance companies as to what is an older house. There are no hard and fast rules but generally houses built prior to 1945 or 1935 will fall into the category of older houses.

If you are considering purchasing an older house you need to be aware that most insurance companies will require a report from a qualified electrician confirming that the electrical wiring meets current safety standards. If it doesn’t, the insurance company will either not provide cover or will provide limited conditional cover until the electrical wiring has been brought up to standard. In some cases this can involve thousands of dollars of electrical work required to achieve this. This also has ramifications in respect of a purchaser obtaining finance. Banks require as part of their finance conditions that the property will be insured as from the settlement date with their interest noted on the policy.

Therefore when purchasing an older house we strongly suggest you contact us prior to signing any agreement as the agreement should be made conditional upon an electrical report and obtaining insurance in addition to any other conditions you may require. This would enable a purchaser to, for example, negotiate a reduction in the purchase price if it transpires that substantial electrical work is required. As a purchaser you do not want to be in a position where, for example, two days before the settlement date you discover that you are unable to obtain insurance cover due to substantial electrical repair work being required which in turn affects your ability to  settle as the bank will not release the loan funds until insurance is confirmed.

From a vendors point of view if you are considering putting your house on the market and it is an older house then you could well save costs and delays in the sale process by obtaining your own electrical report and if electrical work is required completing that work and obtaining a certificate from the electrician confirming that the electrical work complies with current safety standards.

If you require any advice or further information on the matters dealt with in this publication please contact the lawyer at Farry and Co. who normally advises you, or alternatively contact:

Simon Milne

03 477 8870 or 09 379 0055


The information contained in this publication is intended as a guide only.  It does not constitute legal advice and should not be relied upon as such.  Professional advice should be sought before applying any of the information to particular circumstances.  While every reasonable care has been taken in the preparation of this publication, Farry and Co. does not accept liability for any errors it may contain.

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