Historically, wiring installation standards were less stringent in the age of knob-and-tube wiring than today. Compared to modern electrical wiring standards, the main shortcomings of knob-and-tube wiring are: knob-and-tube wiring never included a safety grounding conductor; did not confine switching to the hot conductor (the so-called Carter System places loads across the common terminals of a three-way switch pair); and it permitted the use of in-line splices in walls without a junction box (and thus exposing a potential fire hazard of an uncontained spark caused by arcing following mechanical failure of the splice). Compared to modern thermoplastic wiring insulation, the K&T wiring was less resistant to damage.
Knob and tube wiring can be made with high ampacity. However, most existing residential knob and tube installations, dating to before 1940, lack the capacity that is desired today because of the paucity of circuits. Although these installations were adequate for the electrical loads at the time of installation, modern households use a range and intensity of electrical equipment unforeseen at the time. Home buyers often find that existing K&T systems lack the ampacity needed for today’s levels of power use. As household power use increased following the Second World War (because more appliances were produced, and in use at the same time). First-generation wiring systems became susceptible to abuse by homeowners who would avoid repeatedly blowing fuses by using fuses with too large an amperage there by overfusing the circuits, thus subjecting the wiring to heat damage due to higher levels of current.
Knob-and-tube wiring may also have been damaged by building renovations. Its cloth and rubber insulation may be dried-out, thus brittle when handled, or it may have been damaged by rodents or carelessness (for example, by hanging objects off wiring running in accessible areas like basements).
Currently the United States NEC forbids use of loose, blown-in, or expanding foam insulation over K&T wiring. This is because K&T is designed to let heat dissipate to the surrounding air. As a result, energy efficiency upgrades that involve insulating previously uninsulated walls usually also require replacement of the wiring in affected homes.
As existing K&T wiring gets ever older, insurance companies may deny coverage due to increased risk. Several companies will not write new homeowners policies at all unless all K&T wiring is replaced or unless an electrician has certified that the wiring is in good condition.