Why do I need a homeowners insurance inspection?
When switching homeowners insurance carriers or purchasing your first homeowners insurance policy, your insurer will likely send an inspector out to your home. This is common with almost all carriers.
This article answers the questions:
How do home inspections work?
If you're concerned about an inspection because of your home's condition, we suggest making those improvements prior to switching carriers. You don't want to take the risk and possibly open a can of worms, resulting in more requirements.
A home inspection can also be beneficial. You can have peace of mind knowing you have the proper dwelling coverage. You're also doing your part to avoid any hazards on your property by recognizing risk through the eyes of a professional.
After purchasing a new homeowners insurance policy, an inspection will take place within the first 30-60 days of the policy being active. The most common type is an exterior inspection, where they take photos looking at the outside only. You do not normally need to be present for an exterior inspection. Other times, depending on different factors (i.e. age of the home, high square footage, or higher fire or weather risk zone), an inspector will schedule a full interior and exterior inspection.
In some rare cases, an inspection will not be done at all. It’s all up to the carriers’ guidelines and their underwriting guidelines.
Insurance companies order inspections for 2 main purposes:
Replacement Cost:
Homeowners do their best to go through their property information and provide details, while our agents do our part to calculate the proper replacement cost. However, if it’s an older home or changes were made to the home that were not noted originally, the inspection may come out higher or lower than what was estimated.Property Conditions:
Inspectors do look out for potential hazards. This could include decks without hand rails, a roof in need of replacement, siding concerns, or an old electrical panel. Insurance carriers want to make sure the property is well maintained and taken care of with “pride of ownership.” They will also verify if the home is occupied or not–it’s always best to be honest and upfront with your agent to find the right product for you. If undergoing major renovations or vacant, an insurance company can cancel a policy for misrepresentation if there is major remodeling and/or you have not moved into the property. Underwriters don't like surprises.
Keep in mind that the inspector is usually from a local inspection company company hired by the insurance carrier. They do not work for the insurance company. Inspectors produce their own reports, submit it to the insurance carrier, and the underwriters review based on the company’s guidelines.
There are 4 points of focus:
Roof
Plumbing system
Electrical system
Heating system
We normally ask questions about updates to these systems during the quoting process. Since these 4 points tend to have a limited lifespan, insurance carriers want to make sure they get updated every so often. Once worn out, they can result in fires with older electrical systems and major water damage with leaky pipes or a worn out roof.
If the inspection comes out normal and doesn’t reveal anything unexpected, then things continue as they are!
If the inspection shows that coverage needs to be increased in order to be properly covered, the policy will correct to reflect the amount in the inspection report. Also, if they find other safety features (i.e. alarm systems, interior sprinklers, or retrofitting), they will apply those discounts onto the policy.
If you do not pass the inspection, you may simply just need to fix the item(s) noted in the report. For example, this could include trimming a tree that’s overhanging the roof, or patching up part of your roof.
The carrier will provide a deadline in order to get these items completed–by law, they must provide at least a 30 day notice. Some will extend this out for a few months in the future and others may even give you a full year to make repairs and only nonrenew the policy if they aren’t completed.
If you can’t fix the items in time, or your home just does not fit the guidelines (i.e. either too old or too close to brush), you can still get insurance through other markets. We work with carriers that specifically insure harder to place homes, as well as the surplus lines or non-admitted marketplace. If unable to find coverage through these markets, we also have the ‘last resort’ option of California FAIR Plan, which insures the home for basic coverages.