What You Need To Do Before Your First Home Insurance Inspection
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Insurance carriers may require a home inspection before you purchase or renew a policy so they can get a more accurate picture of your home’s risk. If the inspection fails, your insurer may give you notice that they are canceling or refusing to renew your policy or require you to make suggested repairs. You may also face higher premiums if your home is of particularly high risk.
Continue reading to learn how a home insurance inspection works and steps you can take to prepare for the inspector.
What Are Home Insurance Inspections?
A home insurance inspection is an assessment of the property's condition required by an insurance company to determine the replacement cost of the home and the risk of damage or loss. The insurer may require it a few weeks after agreeing to insure a home to more accurately calculate the property’s risk. If you're an existing customer, they may require the inspection as a condition of renewing your policy.
Based on the results, the insurer calculates the cost of your dwelling coverage (also known as your home’s replacement cost) and liability exposure.
What Are the Major Components of a Home Insurance Inspection Report?
If the insurance company only requires an exterior inspection, a home insurance inspection covers the following:
- Roof and gutters
In cases where the insurance provider also requires an interior inspection, the inspector may also assess the below features:
How Does A Home Insurance Inspection Work?
After your insurance company informs you of the inspection requirement, you will need to schedule the date and time for the inspector’s visit. Homeowners are not always required to be present during the inspection but it is recommended that they are available to answer any questions the inspector may have.
According to Aaron Miranda, a certified master inspector and the president of California-based Vecino Home Inspection, an inspection will generally take one to three hours and will largely depend on the type of inspection and the size of the home.
“When considering that the bigger a structure gets, we typically find multiples of one system in place,” Miranda told SmartFinancial in an email. “In larger homes, it is not uncommon to find two or three HVAC units, multiple water heaters or even multiple kitchens.”
Miranda also noted that the inspector may be seen walking back and forth and this is because they’re attempting to identify the source of the issue. “A home works together and against itself at the same time,” he explained. “This means that when things are installed incorrectly in one area, it may be causing a defect in another.”
What Happens After the Inspection?
After the inspection, the inspector will take their findings and write a detailed report outlining the property's condition and recommended repairs or improvements. According to Miranda, the average turnaround time for an inspection report to be completed is 24 hours but it may take longer depending on the size of the property and if there were numerous issues.
The insurance company will then use this report to calculate the insurance premium and determine the level of coverage required. If the findings are highly unfavorable, they may refuse to continue insuring you (more on this later).
How To Prepare for a Home Insurance Inspection
“The main thing a homeowner should do to prepare for a home inspection is to allow as much access to the interior and exterior of the home as possible and make sure all utilities to the home are on at the time of inspection,” Miranda advised.
This will often involve clearing clutter and knowing where your electrical panel and external HVAC system is located. In addition, if you have any pets, you may want to house them elsewhere during the inspection or have a plan to isolate them in certain rooms while the inspector does their work.
Smart tip: If you’re already aware of any issues like a leaking pipe prior to the inspection date, consider getting it fixed before the inspector arrives. They will almost certainly note it and it’s best to address it before it affects your premium or insurance status.
Is a Home Insurance Inspection Necessary?
Not all insurance companies will require a homeowners insurance inspection but it may be required if you live in an older home or the insurer can't determine the property’s rebuild cost. In addition, an insurance company may require a home insurance inspection if the property is highly vulnerable to certain perils, like wildfire or hurricanes.
Insurance companies may even require a home insurance inspection for their long-time customers. If it has been 10 years since your last home inspection, your homeowners insurance company may require an inspector to make a visit before they agree to renew your policy for another term.
What Types of Home Insurance Inspections Are There?
Your home will generally undergo one of two types of inspections: 4-point or full.
A 4-point inspection examines the four specific areas of a home: HVAC, electrical system, plumbing and roofing. This type of inspection is typically required by home insurance providers to assess the risk of insuring a property. 4-point inspections are usually more limited and take less time to complete, usually taking 30 to 60 minutes according to Miranda.
In contrast, a full inspection is a comprehensive examination of the entire home, including its interior and exterior features, appliances and systems. A full inspection is often performed by a licensed home inspector as part of the home-buying process or for general maintenance and repair purposes.
What Do Home Insurance Inspectors Look For?
During a home inspection, the inspector will examine the property's visible and accessible features, systems and components. They will typically focus on areas that are of particular concern or that could pose safety or liability issues, including:
- Foundation, framing and roof
- Condition of electrical, plumbing and HVAC systems
- Presence of water damage
- Functionality of appliances and fixtures
- Overall safety of the property, including fire safety and potential hazards
- Evidence of pests, such as termites or rodents
- Condition of outdoor structures or amenities, such as decks or pools
How Much Do Home Insurance Inspections Cost?
According to Miranda, the average cost of a 4-point inspection ranges from $100 to $175. If you opt for a more comprehensive full inspection, the average price point increases anywhere from $430 to $900.
Of course, the actual cost will vary, with the location, property size and its unique details being common pricing factors. The inspection of amenities like pools or hot tubs may incur an extra fee, too.
What Happens if My Home Insurance Inspection Fails?
If additional liabilities are discovered during the inspection that were not considered in the initial policy, your premium may increase. This may also be the case if home characteristics differ from those listed on the application or if the replacement value is higher than initially anticipated.
If a home insurance inspection report shows serious issues like a deteriorating roof, your insurance policy may be put on notice for cancellation or nonrenewal. Alternatively, the insurer may require you to make necessary repairs, such as replacing an old roof or outdated utilities, as a condition of continuing to insure you.
“Sure, a bad inspection could mean a huge hit to your bank account but even more so, it can also mean physical harm to you or your loved ones,” Miranda said. “There is a reason why inspectors need to call out certain defects and they all have to do with risks to humans.”
If you are having difficulty finding home insurance coverage for your property, you may want to look for a policy that specializes in high-risk properties. For example, an HO-8 policy specifically insures older properties. You may also want to look into your fair access insurance plans, or FAIR plans, which are state-run programs that either insure high-risk properties or help these homeowners find coverage.
How Often Should I Get My Home Inspected?
For many, encounters home inspections are limited to only when they’re buying or selling a home and when required by their insurance company (if at all). However, Miranda recommends ordering a home inspection every other year, especially if you live in an area with extreme weather.
“Everything that goes into a home has a shelf life and does eventually need replacing at one point or another but even more so when things are used more often than normal,” Miranda said. Identifying when key aspects of your home need replacing, maintaining or upgrading can keep it safer, insulated and may even increase its appraisal value down the line.