You might see what is called "knob-and-tube" wiring in an old house. Typically, you'll see it in the basement or attic space. It is an antiquated system that will need to be updated at what could be a major expense.
The way to notice it is if you see surface mounted individual conductors held in place with round white ceramic insulators. Sometimes you will see this set up, say in a basement, running along the floor joists. But with close examination, it looks like the system is no longer active -- it might have been cut and disconnected, but the materials are still there. A qualified inspector or electrician can tell you if the knob-and-tube wiring is still active.
We had some knob-and-tube at our duplex in St. Albans when we bought it. Updating the wiring was our #1 priority. Dave was an insurance agent at the time and knew we would have trouble getting a standard insurance policy with active knob-and-tube wiring. He said whatever policy we could get if the old wiring was in place would be very expensive unless we replaced the wiring. In our case, the cost was $5,000 in 2005.
We looked at a multi-family in Burlington the other day that had knob-and-tube wiring. In order for the building to get a certificate of compliance, the city required that the owners "Provide written documentation to this office from licensed electrician (sic) that the wiring is not overloaded and that the condition of the conductors and insulators is sound and substantially without defect or hazard." Many cities and towns are working hard to make sure multi-family dwellings are safe for their occupants.
For that reason, we decided to get rid of our knob and tube in our duplex -- an upgrade we were happy to make.
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