Why can insurance become an issue when selling an older Greater Victoria home? Certain features common in older properties, including active knob-and-tube wiring and underground oil tanks, can make insurance more difficult or expensive to obtain. Depending on the insurer and the circumstances, coverage may also come with conditions that need to be addressed before or after closing.
If you own an older home in Greater Victoria and you’re thinking about selling, one issue worth investigating early is how the home’s older systems may affect a buyer’s ability to obtain insurance.
Most sellers expect a home inspection to uncover potential concerns. They may fix obvious maintenance items, tidy the crawlspace and prepare for a report they can work through with a buyer.
What can be less obvious is the role of the buyer’s insurer.
An older electrical system, an underground oil tank or uncertainty around previous upgrades may not prevent a home from selling. But if those issues aren’t discovered until a buyer is trying to arrange insurance under the timeline of an accepted offer, they can introduce another layer of complexity at exactly the wrong time.
The insurer and the inspector are looking at different things
A home inspector and an insurance company aren’t answering the same question.
An inspector assesses and reports on the condition of a property. An insurer decides whether it’s willing to take on the risk of covering that property, under what terms and at what cost.
For a buyer who is financing their purchase, that distinction matters. Mortgage lenders typically require adequate property insurance before advancing funds. If a buyer has difficulty obtaining acceptable coverage, or their insurer requires work that can’t reasonably be completed within the transaction timeline, it can affect their ability or willingness to proceed.
This is particularly relevant with older homes because some of the features that give them their character can exist alongside systems that predate today’s building standards.
Knob-and-tube wiring and underground oil tanks are two issues we regularly pay attention to, but they’re not the only property characteristics an insurer may consider. The age and condition of electrical, plumbing, roofing and heating systems can also affect underwriting.
The important thing for a seller isn’t to assume that an older home will be difficult to insure. It’s to understand what is actually there before a buyer is trying to figure it out under an offer deadline.
Knob-and-tube wiring
Knob-and-tube wiring can still be found in some of Greater Victoria’s older homes, including properties that have otherwise been substantially updated.
Depending on the insurer and the extent and condition of the wiring, active knob-and-tube may affect whether coverage is available, the cost of that coverage or whether electrical work is required within a certain timeframe.
One of the challenges is that partial knob-and-tube isn’t necessarily obvious.
A home may have a newer electrical panel and renovated rooms while still having an original circuit serving part of the house. Unless someone has established what wiring remains active, both sellers and buyers may be working from assumptions.
That’s why an electrical assessment can be useful before listing an older home where knob-and-tube may be present. The goal isn’t necessarily to replace everything before the property reaches the market. It’s to establish what is actually there so you can make an informed decision about what, if anything, should be done.
Underground oil tanks
Underground oil tanks present a different set of considerations because they can involve both insurance and potential environmental liability.
Many older Greater Victoria homes were once heated with oil. Depending on the property, a former tank may have been professionally removed, decommissioned in place or left underground. In some cases, the current owner may simply not have much information about what happened decades ago.
Those are very different circumstances.
A property with documentation showing that a previous tank was properly removed is not the same as a property where there is uncertainty about whether a tank remains underground.
That uncertainty can become an issue during a sale. A buyer may want more information, their insurer may have specific requirements, or further investigation may be needed before everyone is comfortable proceeding.
If your home previously used oil heat, it’s worth gathering whatever documentation is available well before listing. Records relating to tank removal, decommissioning or previous environmental work can help give prospective buyers a much clearer picture of the property.
The Insurance Bureau of Canada provides general information about factors that can affect home insurance. It’s also important to remember that underwriting requirements can vary between insurers. What one company accepted for a current owner years ago doesn’t necessarily tell you what another insurer will require from a new buyer today.
Why this matters when buyers have more choice
Insurance considerations can matter in any market, but complications tend to carry more weight when buyers have several properties to choose from.
Greater Victoria buyers currently have considerably more selection than they did during the tightest inventory periods of recent years. That gives them more time to compare not only price and condition, but also the practical implications of owning each property.
A buyer who encounters an unexpected insurance requirement may also be considering another home that doesn’t present the same uncertainty.
That doesn’t mean every older system needs to be replaced before you sell. It does mean that reducing uncertainty can make the buying process easier.
A clear answer about the electrical system is better than a guess. Documentation for a previous oil tank removal is better than relying on memory. And if there is a known issue that you don’t intend to address before selling, understanding it in advance allows you to think carefully about disclosure, pricing and how it may affect prospective buyers.
Getting ahead of insurance issues before you list
The goal isn’t to renovate the character out of an older home. It’s to remove the surprises that can make an insurer, and then a buyer, hesitate.
Confirm what’s actually in the walls. If knob-and-tube wiring may still be present, an electrical assessment can establish whether any remains active and give you a clearer understanding of the home’s electrical system.
Sort out the oil tank history. If the property previously used oil heat, gather any documentation you have about the tank and determine whether further investigation is appropriate.
Keep records of previous upgrades. Electrical, plumbing, heating and other significant improvements may be easier for a buyer to understand when permits, invoices or other documentation are available.
Decide what makes sense to address before listing. Identifying an issue doesn’t automatically mean it needs to be repaired before the home reaches the market. Some conditions may be worth resolving in advance. Others may be better handled through clear disclosure and an appropriate pricing strategy.
That decision depends on the specific property, the cost and practicality of the work, the buyers you’re likely to attract and your timeline.
The advantage of investigating these things early is that you get to make those decisions deliberately rather than under the pressure of an accepted offer.
Older homes are an important part of Greater Victoria’s housing stock, and they sell successfully every day. The objective isn’t to make an older home behave like a new one. It’s to understand the property well enough that both you and prospective buyers know what you’re working with.
FAQ
Can I sell an older Greater Victoria home that has knob-and-tube wiring?
Yes. The presence of knob-and-tube wiring doesn’t automatically prevent a home from being sold. However, it may affect a buyer’s insurance options depending on the insurer, the extent and condition of the wiring and whether remediation is required. Knowing what’s present before listing allows you to decide whether to address it in advance or disclose it clearly, while giving prospective buyers an opportunity to investigate their insurance options.
Does an underground oil tank have to be removed before closing?
There isn’t one answer that applies to every transaction. The circumstances of the tank, the property, the buyer, their insurer and their lender can all matter. Establishing whether a tank is present and gathering documentation about any previous removal or decommissioning gives you much more room to determine the appropriate next step before a sale is underway.
Is insurance really as important as the home inspection?
It can be. The two serve different purposes. An inspection helps a buyer understand the property’s condition, while insurance can affect whether the buyer is able to satisfy their lender’s requirements and complete the purchase. For an older home, it’s worth thinking about both before the property reaches the market.
Will my current home insurance tell me whether a buyer can get coverage?
Not necessarily. Insurance companies have different underwriting requirements, and those requirements can change over time. A policy that has been in place for years doesn’t guarantee that a new buyer will be offered the same coverage or terms. That’s one reason it’s useful to understand and document the home’s systems rather than relying solely on its current insurance history.
Thinking about selling an older Greater Victoria home?
If you own an older home in Oak Bay, Saanich, North Saanich or elsewhere in Greater Victoria, understanding its electrical, heating and oil tank history before you list can help you make better decisions about preparation, disclosure and pricing.
Not every older system needs to be replaced, and not every potential insurance concern will become an obstacle. The first step is simply knowing what you have.
If you’d like a hand thinking through what may be worth investigating before your home goes to market, we’re happy to talk it over. Contact us.
North Pacific Homes Group, eXp Realty
Greater Victoria & South Vancouver Island
250-634-2141
Thanks for being here,
Alex Hughes, REALTOR®, Personal Real Estate Corporation — North Pacific Homes Group (eXp Realty) | Victoria, BC Real Estate
Ricki-Lee Jewell, REALTOR® — North Pacific Homes Group (eXp Realty) | Victoria, BC Real Estate
Steven Reilander, REALTOR® — North Pacific Homes Group (eXp Realty) | Victoria, BC Real Estate
