Knob-and-tube is the original wiring style for homes built before 1950. It's not inherently unsafe — millions of homes still operate on it. BUT: it can't be loaded heavily, can't be wrapped in modern insulation (overheats), and can't be safely modified by homeowners. Most insurance carriers want it remediated when they discover it.
For most Seattle homes, partial K&T remediation ($5,500-$9,500) is the right answer. We replace the active K&T runs (visible in basement and attic) with modern Romex, leave the dormant runs (sealed in walls), upgrade the panel if needed, and provide the insurance documentation packet your carrier wants.
Full whole-home rewire ($8,000-$22,000) is the right answer when (a) the carrier specifically demands it, (b) you're doing a major remodel and the walls are open anyway, or (c) the K&T is in worse condition than typical (cloth-insulation degradation, bad junctions).