The only problem for me with considering a indoor wood burning furnace is that the house has no current chimney
Well, that could be an issue, but keep in mind that you may be able to install a stainless steel Class A chimney out through the basement wall for $500-$1000 depending on your situation. Menards puts Supervent brand Class A chimney on sale once in a while, they have by far the best price on it.
I would have to clear it with my current insurance or possibly shop for different insurance that is willing to provide coverage on a indoor wood furnace. Does anyone know if it cost you more insurance to have one?
I would say that about 75% of HO ins companys will be Ok with wood heat as long as it is "secondary". Meaning that you have some other form of "automatic" heat that will keep the place from freezing up without any manual input from anyone. So when you call them, you will want to make sure they understand that the wood heat is not "primary", even if you plan on not running the LP much.
Some will want the chimney and wood burner installed by a "pro", or maybe inspected by some "pro" of their choosing. I use quotes on "pro" because many people come here to figure out how to correct what their "pro" installed.
Many companys will want an extra $50 per year or so if you have any kind of wood burner. If you have a fireplace then you are already paying the surcharge most likely.
To be honest I'm not to thrilled about having an indoor wood furnace partly because I've heard of bad things happening with people with wood stoves which I know are two different things, but still makes me wonder how much safer they are than wood stoves?
Like
@DoubleB said, do a proper install, burn good dry wood, do good chimney maintenance, and keep all combustibles away from the stove/chimney and you will really limit your chances of a problem down to about the same as with any regular furnace.
when I seen the new EPA Phase 2 models that are supposed to burn 30-50 less wood than older models and were more efficient I became interested in looking into an alternative heat source.
This is what I have heard too. One other thing that can really improve performance with a OWB is to have storage...hot water storage that is. An large well insulated tank that the boiler will heat up as fast as it can (not allowing the fire to smolder, which causes alot of the smoke and stink that OWBs are so famous for) then when your house calls for heat it draws hot water form the tank as needed. The are many threads on here about ways of doing boiler storage. It can get pricey to do it well though...
For this reason I was leaning toward and outdoor wood boiler as its far away from the house and I also heard they can connect to existing duct work and radiant heat space heaters ran through my house. Sounds like this is not possible with an indoor one correct?
No, indoor (IWB) or outdoor (OWB), either one can be hooked up to push hot air, or hot water...or really you could do both with one unit.
But when someone refers to a wood furnace...generally they are meaning a unit that just pushes hot air (forced air)