Article 394 NEC does not prohibit the installation of loose or rolled thermal insulating material in spaces containing existing knob-and-tube wiring provided that all the following conditions are met:

(1) The wiring must be surveyed by an appropriately licensed electrical contractor who must certify in writing to the department that the wiring is in good condition with no evidence of improper overcurrent protection, conductor insulation failure or deterioration, and with no improper connections or splices. The electrical inspector must inspect all repairs, alterations, or extensions to the electrical system.

(2) The insulation must meet Class I specifications as identified in the Uniform Building Code, with a flame spread factor of 25 or less as tested using ASTM E84-81a. Foam insulation may not be used with knob-and-tube wiring.

(3) All knob-and-tube circuits must have overcurrent protection in compliance with NEC Table 310.16, 60 degree centigrade column. Overcurrent protection must be either circuit breakers or Type S fuses.