Heritage-listed Properties and Insurance

“Insurance companies discriminate against heritage-listed homes.”

“If I buy a heritage-listed home my insurance will go through the roof?”

“No insurance companies will cover my home if it is heritage-listed.”

These sorts of questions and comments are frequently asked of us at EHC. While EHC is not an insurance broker and does not offer insurance policies, the following article provides some general advice which may assist with your enquiries. There appears to be an increasing concern in recent times of the insurance implications of a property being heritage-listed. This fear stems from the misconception that insurance is either not plausible or will be enormously expensive when considering purchasing or already owning a heritage item. It is a common fear that feeds into the accepted idea of heritage items as detrimental assets for homeowners. To alleviate this fear and debunk this negative take on heritage items this article will address the key concerns and things to consider when seeking to insure a heritage-listed property.

Am I able to get insurance if I own a heritage item?

Insurance, on a fundamental level, looks at the underwriting of risk. This principal is widespread in all forms of insurance whether it be home, car, health or travel etc. This involves estimating the potential for loss, the likely frequency and severity of that loss and apply a rate or premium proportionate with that risk to cover any potential damages.

To do this, insurers will consider routine questions to inform their assessment:

Is the building well maintained?
Does the plumbing and electrical wiring meet modern standards?
For what purpose is the building used and is it regularly occupied?
Is there any fire alarm system and how is it monitored?
How often do/have you made claims in the past?
What is the age/construction of the building?

In short, insurance policies are not formulated to cover maintenance and wear and tear. If the heritage item has been well maintained, has the appropriate safety features and is regularly occupied, there should be no identifiable reason why suitable insurance could not be obtained.

Will my insurance and premium be significantly more because of the heritage-listed status?

On its own, heritage listing, should have no effect on insurance premiums. If you have a high premium for your house it is more likely that one or more of the following were the contributing factors;

Natural Hazard Risks, i.e;
- If your property is in a bushfire zone
- If your property is in a flood zone
- If you’re located in an area subject to frequent storms
Home security – crime rate in your local area
Median suburb price
Changes in the insurance market
Age of the people residing in the home
Credit history/claim history

A survey completed by the Office of Environment and Heritage demonstrated that very few insurance companies charged higher rates for heritage-listed properties. As demonstrated above there is a regulated formula to ascertaining the potential risk factors of a home and in turn influencing the price and type of coverage for home insurance.

The study did however bring to light that older homes (not specifically heritage items) had a higher frequency of claims. Indicating that “valuations which show the true replacement cost of the property and the application of an average clause that ensures property owners contribute to the cost of repairing under-insured properties, are sometimes required for listed homes.”[1]

It is important to note that every house and property has different characteristics and attributes and when going through the process of obtaining insurance, it is important to resist the temptation to underinsure as a way to ‘cut costs.’ If you undervalue your property when taking out the policy, your insurer may not pay the full replacement cost if something unforeseen were to happen.

Do I need to go through a specific insurance company or Broker?

No. The majority of ‘mainstream’ insurance companies will offer insurance to a heritage item.

Similarly, there are no specific requirements regarding the type of cover you need for your property. As with any insurance company being specific and upfront about the kind of coverage you need will be crucial to effectively insuring your home. Ensure your policy includes; “like for like repairs,” coverage for any in-built furniture and any ancillary structures. A helpful way to ensure you and your insurance company have all the appropriate information is to take detailed photographs of your home and present them with a coherent and accurate valuation of all aspects of your heritage item.

What if insurance is refused?

In recent times there has been publicity alluding to the idea that simply because you own a heritage-listed item you will be refused insurance. A heritage listing status alone, is not a justifiable reason to refuse insurance. Section 75 of the Insurance Contracts Act (1984) states that if requested in writing, an insurer is required by law to clearly state why insurance is being refused. By obtaining access to this specific information you may find the issue is something that can be readily addressed and rectified allowing you to move forward with insuring your home or property.

Alternatively, if you feel you are having an abnormally difficult time obtaining insurance seeking the advice of an Insurance Broker or ‘shopping around’ may be beneficial to ensure you receive the best coverage for your property at the best price.

Summary:

Having a heritage-listed item does not prevent you from obtaining insurance. Insurance companies will assess your property based on features such as age, condition, location, plumbing and electricals and purpose of the building. Having a well-maintained property that meets standard requirements will mean you will have minimal difficulty obtaining insurance.
There are many contributing factors to an increase in insurance premiums, but heritage listing is not one of them.
You can readily obtain insurance from most mainstream insurance companies with any of their typical policies. If you believe your property has special considerations i.e. is vacant, needs rewiring, is a commercial building, you will need to inform your insurance company prior to receiving your policy.
Insurance will not be refused on the basis of a heritage listing. Seek further information or speak to an Insurance Broker if you find you are having difficulty obtaining insurance.
Below are helpful links if you wish to learn more about insuring a heritage-listed item:

Office of Environment and Heritage (NSW); Insuring Heritage Listed Buildings. 2012.

Department of Environment and Water (S.A); Insuring Your Heritage Place. 2017 – Factsheet.

Heritage Council (W.A); Insuring your heritage-listed property. 2019.

Insurance Complaints – Australian Financial Complaints Authority

[1] Phillips, M. 2012. Insurance Council of Australia. Heritage Office Seminar.