What Stern is proposing is the state’s first comprehensive effort to prevent loss of life and property by regulating where people can build.

This is not comprehensive, but hopefully illustrative.The quick answer may be to look at your "opportunity costs".

With no coverage, expect the lender to sue you for their loss. 

On the commercial side 5+ units bankers will often mention debt service coverage ratio (NOI/debt service) which may be in the 1.2-1.3 range last time I was looking at it.

Which material would you have less leaks, challenges with insurance coverage, longer lifetime?

Debt Service Coverage Ratio.  

DO it now. in the north water freezes and expand, it will crack the foundation walls.Common cracks in dry/ plaster walls, it will happen.Galvanized pipes, the insurance will limit the coverage, make sure there are no big trees near the line and get  it inspected with a camera, about cost about $300 to $400 depending the state for the inspection.

Insurance Carriers & Building Inspectors deny coverage & inspection approvals on K&T & old ungrounded circuits.I did one myself & as @Eric James said it's a couple of days work & for me $400-$600 with an upgraded service feed, upgraded panel & all new wiring to ALL new outlets.

Go through commercial lending and they wont care about your DTI as much, just the main income of the property and it's Debt Service Coverage Ratio.

It's difficult to say why you think these quotes are unreasonable without providing the coverage and the cost.Are they unreasonable because they don't insure what is needed for the price?