In my experience in the field I didn't see that much hacked K&T. I saw a lot of K&T that had other independent electrical circuits added. And I saw a lot of other electrical that was hacked. I see no reason to believe that K&T is more of a problem than other wiring. Most of the hacked wiring in the report halerb found was not identified as involving K&T. As for hazard, I would rather see K&T than the early 2 wire Romex with non-plastic sheath (tarred paper?).
As I said above, I have seen no reason to believe K&T is more of a hazard than other wiring. Insurance companies employ numerous actuaries to determine risk. I want decisions to be based on casualty data, not opinions.
Although I have heard NJ is a hotbed of hacked electrical. It may be justifiable to not insure the whole state.
And last I heard (about 15 years ago) large areas of PA had no electrical inspection. Maybe insurance should not be available in those areas.
As I have said several times, State Farm (probably) had a surcharge on houses with 'older' services in Minnesota (they didn't have to be very old). The state insurance regulator disallowed the surcharge. It is an example of insurance companies imposing limits they can't justify.
With no casualty data to justify the decision I see no reason to believe K&T exclusion is not redlining. Insurance companies have redlined in the past.
You can do whatever you like. But I wouldn't buy a house in NJ or PA.
I would buy maybe requiring an inspection by an electrician, such as is required by some jurisdictions that allow insulation over K&T. Maybe it should involve other wiring if there is evidence of problems?
Making housing stock that is over 70 years old uninsurable is a bad idea and may have legal problems, not to mention problems with governmental units that have such housing.
If you read the "Illinois" report, which looked at the record of hazard with K&T, you will find that "looking at the record of the code change, it was not based on data substantiating a actual problems." (If you look at the record of proposed code changes in general, a high percentage of them are rejected because there is no "substantiation" of the need for a change.)
In the record of the code change, a comment from the chief electrical inspector of Minneapolis said there was no record of a problem in the large number of houses with K&T that have been insulated.
In 5 cases, the change to the NEC requirement was not just the local electrical inspector. The change was state wide.
I see no reason to allow the NEC decision, based on no data, to be used as an authority when other high level electrical professionals (entire states) disagree - AND there is NO RECORD of a significant hazard. Don't you think horror stories would have surfaced? Don't you think halerb has looked for them?
halerb did successfully find yet another source, a report after an investigation, that doesn't show a problem.