The proud, new owner of an older home is often surprised that the home is more expensive to insure than a newer, more costly home. There are a few, easy to understand, reasons why this may be true. Market values not being equal to replacement values, outdated plumbing and outdated utilities are three reasons why homeowners insurance may be more expensive for these older homes.

Homes of yesterday were built with the materials and workmanship common to that period. Solid wood doors, double hung windows, leaded glass, lath and plaster walls and extensive trim and wainscoting were common features. The cost of these materials today is very expensive, and these features often require specialized labor to reproduce and install. This specialized labor also comes at a premium price. It is more expensive to replicate an older home than it is to build a new home with today's materials. The market value is less than the cost to replace the home with the same materials and workmanship as the original.

Perhaps the older home was built to a more modest standard without extensive trim and ornate features. This may be a bargain house that was bought for little money. The age of the home and work required to correct its deficits resulted in a lower sale price. The same principle holds true with the shortfall between market value and replacement cost. In this case, the home will be more expensive to replace with today's materials and according to modern building codes than its current market value.

Older plumbing was made from galvanized or wrought iron materials. While those were the standard materials for the time, they are outdated today. The insurance company views this original type of plumbing as high risk for leaking or breaking. Water can be almost as damaging as fire. Besides ruining many things it saturates, it also sets up a hospitable environment for mold to grow. Water damage cleanup and restoration are very expensive.

Utilities include the electrical and heating systems. Old wiring systems that rely on fuses are not as safe as modern circuit breakers. Old wiring was not designed to carry the heavy load of modern day appliances that could cause shorts and result in fires. The same is true of older heating systems. Outdated furnaces, boilers and open flame space heaters increase the chances of fire.

Outdated plumbing, heating and electrical systems put older homes at risk for water damage and fire. Because of the high risk, insurance premiums will be correspondingly higher for older dwellings than for modern construction. High risk coupled with a higher than normal replacement value may increase the cost of homeowners insurance.