What Is A 4-Point Inspection And Why Do You Need One?
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The year 2020 saw 5.64 million existing homes sold, according to the National Association of Realtors (NAR). Comparatively, the real estate market only saw 822,000 newly constructed properties sold in the same year, based on the U.S. Census Bureau's data. This means that around 85% of potential home buyers looked at previously owned properties – meaning older properties – from July 2020 to July 2021, compared to the 15% buying a new home. Additionally, the majority of homes in America right now, around 10.5 million according to Statista, are between 20 and 31 years old.
Older homes are often subject to 4 point inspections. Here is a guide to the 4 point inspection process and how it may impact you.
What Is a 4-Point Inspection?
Homeowners insurance companies sometimes require 4 point inspections before selling you an insurance policy or renewing your existing policy on an aged home.
A four-point inspection is a key examination insurance companies require before providing homeowners insurance. During the inspection, a licensed home inspector reviews the current condition of your home or condominium. In particular, they focus on four major systems: HVAC, electrical wiring, plumbing, and roofing. This is how the 4 point inspection earns its name.
Your insurance company learns from a home inspector, an unbiased source, whether or not it's risky to insure the property. Certain conditions the home inspector may flag can turn into a liability in the future unless they are fixed. You may not be able to buy a home insurance policy until you take care of the problems, which left unresolved will only lead to higher costs down the line, both for you and the insurer.
When Is a 4-Point Inspection Required?
Not every home requires a 4-point inspection. However, a 4 point inspection may become a requirement if you want to purchase an older home, which is more prone to structural issues. If your home has some wear and tear, you may need a 4 point inspection before a homeowners insurance provider approves it.
Requirements also depend on the home's location, since rules vary from state to state. For example, in Florida, four-point inspections are mandatory for homes over the age of 30.
Why Should You Get a 4-Point Inspection?
In some cases, you may not have a choice. Some homeowners insurance companies require you to get a 4 point inspection if you want to renew your insurance policy or purchase a new one on an aged home. When this happens, your insurer may pay the tab.
A 4 point inspection can be useful to you, even if it's not required. It may help you determine whether or not you should buy a home or negotiate the selling price, all without issues sneaking up on you (most prospective home buyers elect a full home inspection, however, so keep scrolling.).
You can also use a 4 point inspection to help guarantee the condition of your property if you're selling it. Either the home inspection proves the quality and value of your home, or you will know what steps to take to increase its value.
4 Point Inspection vs. Full Home Inspection
People have a full home inspection when they're looking to buy a new home. A Full inspection is more comprehensive than a 4 point inspection and can help determine the true value of a home. A full home inspection requires a qualified professional to review various aspects of the home including appliances, doors, and windows along with all major systems.
Although full inspections aren't required for homeowners insurance, most homebuyers have one done. Also, some mortgage lenders may require it.
What Is Included in the 4-Point Inspection?
A licensed building contractor or home inspector will look at the following four systems to write up a 4-point inspection report. Or, in some cases, insurance companies may require the inspector to use the insurer's form. These reports often include pictures taken of the home's interior and exterior along with photos of each system. The overall process, therefore, is limited to what the home inspector can actually see. They are only able to report on the visible aspects of each of these four systems.
Heating, Ventilation, and Air Conditioning (HVAC)
HVACs come with a slew of health concerns if improperly installed or outdated. They can adversely affect the air quality in a home and allow dust to build. So, anyone with breathing issues or asthma is especially vulnerable to a poor HVAC system.
The HVAC section of the 4 point inspection reviews the heating, ventilation and air conditioning systems. Here, the certified inspector reports on the condition, age, and projected life span of the system. That may include information on fuel usage and heat source as well. Additionally, they look for particular issues, like:
Lack of maintenance or upgrades
Exposed or unsafe wiring
Improper vent stacks
Missing or dirty filters
According to HomeAdvisor, an online marketplace for home repair and improvement, replacing an HVAC system typically costs between $5,000 to $10,000, with the average price at $7,000.
Electrical Wiring and Electrical System
A 4-point inspection includes a review of the home's electrical wiring and electrical system, during which the inspector records both the type and condition of these features. They will also note which repairs are necessary, particularly if they find issues with:
Knob and tube wiring
Double tapped breakers
Neutral and grounds on the same bar of a sub-panel
A Federal Pacific electrical panel
Remember: problems with your electrical system become fire hazards. So, it's vital that you address this system as soon as possible. The most recent data from the U.S. Fire Administration reports that electrical malfunctions or failures lead to 13% of home fires from 2012 to 2016. Despite electrical malfunctions leading to 25,700 fires during 2018, there's been a 2% decrease between 2009 and 2018.
According to HomeAdvisor, replacing an electrical panel costs an average of $1,185 but typically ranges from $534 to $1,939. In addition, Thumbtack, a competing service, claims the average cost to rewire a home sits between $1,500 and $10,000. Although, most homeowners end up paying an average of $2,100.
Plumbing Connections and Fixtures
Checking the plumbing system in your home is a crucial component of the 4-point inspection. As with the other steps, the home inspector looks at both the water system and water heater. With the latter, the inspector especially wants to check if it properly distributes water throughout the house. Once they determine that information, they note the age and type. After that, they look for issues such as:
Old and outdated water heaters
Lack of shutoff valves
Low water pressure due to build-up
High water pressure that could lead to leaks
Polybutylene supply lines
Replacing smaller sections of your plumbing will likely cost between $356 and $1,881, according to HomeAdvisor. This leads the average American to pay around $1,106 for the job. However, if you find yourself installing new piping through the entire home, your costs may run as little as $1,500 and as high as $15,000.
The roof inspection actually stands out in this four-point inspection process. It usually becomes the most comprehensive section since a home's roof impacts more than the building's structure. It also affects factors such as mold growth and energy efficiency. During this part of the inspection, the inspector notes basic information, such as the roof type. In addition, they also examine how old the roof is, how long it will likely last, and any damage. That may include problems like:
Water damage or leaks
Missing or loose shingles or tiles
Damaged or cracked tiles
Excessive granular loss
History of un-permitted or unlicensed work
If you notice your roof exhibits any of the above traits, consider addressing them before the inspection date. Repairing the roof may run into the hundreds, with the average repair costs coming in at $985, according to HomeAdvisor. However, most homeowners spend somewhere between $376 and $1,648. Replacing a roof will run significantly more, with the majority of homeowners paying around $5,588 to $11,646.
How Do I Prepare for a 4-Point Inspection?
When a certified professional comes to your house for a 4 point inspection, they want to ensure the home is safe. So, they look for signs indicating risks to your well-being and health, but only in the four systems. If you want to pass the 4 point inspection, you may need to prepare your home beforehand.
Steps to Take to Pass your 4-Point Inspection?
Here are some measures you can take and things to look for before your 4 point inspection date:
- Ensure that your HVAC unit functions correctly.
You cannot substitute proper central heating and air conditioning in the home. That means a fireplace, window AC unit, or oil furnace does not make up for the lack of an HVAC system.
- Check your home for any ungrounded or exposed wiring.
Also, look for any potential fire hazards that may need to be fixed or replaced. That could include things like aluminum wiring, fuse boxes, or double tapped breakers.
- Pay extra attention to any signs of leakage.
That also includes water damage and deteriorated pipes. Even outside a four point inspection, issues like these can hurt your chances of qualifying for homeowners insurance. So, be careful when looking at plumbing issues.
- Hire a roofing professional before the actual inspection.
Have them do their own assessment of the roof's condition. Then, if they find any damage, missing shingles, holes, etc., you can have them fix it.
What Does an Inspector Look for?
When conducting a four point inspection, a home inspector is looking at four traits in each of the four systems: general condition, age, material and type. Insurance underwriters only want to know about the house's risk factors.
There are also some red flags that inspectors pay close attention to, and certain issues pose greater risks than others. For example, builders used to use a type of plastic resin called polybutylene for water supply piping but soon enough, it became apparent that polybutylene plumbing (PB) had frequent leaks and was removed from the list of acceptable plumbing materials. If your home has PB plumbing, it may lead to a failed 4 point inspection or a more expensive insurance policy.
Similarly, each of the four systems potentially comes with its own red flags. Inspectors look at the following in a 4 point inspection:
Heating, Ventilation, & Conditioning (HVAC) System – The inspector mainly observes the age and condition of the HVAC system. They also look for the presence of central A/C and heat, leaking, and previous part replacements. If you have an HVAC over 20 years old, you'll probably need to replace it.
Electrical – Outdated wiring poses a great risk to the home, so inspectors focus on your electrical system's age. They want to make sure everything is up to code. They also review the condition of the electrical panel and system.
Plumbing – The plumbing portion examines the types of drains and supply lines your home uses as well as the visual state of the pipes. They note any potential leaks and also check the hot water heater.
Roof – A roof check includes the age and condition of the roof. Inspectors focus on the shingles, so insurers know how much it would cost to repair or replace them.
What if I Fail a 4-Point Inspection?
Four point inspections don't work on a grading scale. So, the home inspector either documents the 4 point inspection as a "pass" or a "fail." Some reasons are more common for a 4 point inspection failure than others, such as a lack of a central heat and air conditioning system, a damaged roof, the presence of polybutylene pipes, or the presence of aluminum wiring.
If you end up failing your 4 point inspection you essentially have a few options moving forward.
If it's your home, you must make the necessary repairs before you're insurable. To get insured right away, ask your insurance company if they will accept the failed 4 point inspection, but allow you some allotted time to complete repairs. A common timeline is 30 to 60 days.
If you're buying the house, you can see if the seller of the home will make the required repairs. Or you may be able to negotiate a compromise in which they cover some of the cost or lower the selling price.
Look for Other Home Insurance Companies
Other insurance companies may accept you as an insurance applicant. However, insurance companies may also require proof that you completed repairs on any issues found during the 4 point inspection.
How Much is a 4-Point Inspection?
Each state and city will have its own standard of 4 point inspection pricing. The size of the house may also result in varying prices. However, you can generally expect the 4 point inspection to cost somewhere between $50 and $150. In some situations, a four point inspection may reach upwards of $300. And, of course, that's only the 4 point inspection itself. If a home inspector finds an issue with your home, you may have to repair or replace any problems on the property without the help of an insurance company.
Some insurance companies offer to bundle a four point inspection and wind mitigation inspection for a more substantial discount than you would get on either separately.
Getting a 4 Point Inspection for Your Homeowners Insurance Company
When your home's a little older, and you need to buy a homeowners insurance policy or renew your current one, you may need a 4 point inspection. If you recently bought a home and were asked to do a 4 point inspection, it may be a good way to mitigate future problems with your home. If you failed a 4-point inspection and are looking for a new insurance company, look no further.
Whatever your circumstances, you can find competitive insurance rates in your area, by using SmartFinancial to compare over 200 different insurance companies. With all the options available to you, you're bound to find an insurance company that provides perfect protection for your home sweet home. You may even save up to 40% on homeowners insurance. Simply input your zip code below and get your free quotes today.