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Some insurance carriers require a home inspection before approving you for a policy or a policy renewal. But an inspection isn’t always necessary — each home insurance provider can decide whether to request one from current or prospective policyholders.
Here’s what you need to know about homeowners insurance and inspections:
- What to know about a home insurance inspection
- Is a home inspection required to get insurance?
- How can I prepare for a home insurance inspection?
- What is a four-point inspection?
- How to save on homeowners insurance
What to know about a home insurance inspection
A home insurance inspection is an assessment of a property’s condition and safety. It helps your insurance carrier evaluate your home’s replacement cost and ensure it’s close to the initial estimate. It can also identify any risks that you may or may not have stated when you applied for your policy. This is different from the home inspection you performed when buying your home — while that inspection gave you peace of mind, this one is for your insurer’s benefit.
During a home inspection, an inspector will likely start with your home’s exterior. They’ll focus on its roof, gutters, chimney, siding, and other potential hazards. Then, they may follow up with an interior inspection, focusing on your HVAC, electrical, and plumbing systems. But they may also look at your appliances, walls, ceilings, and other features.
If the insurance inspector determines the replacement value of your home is different from the insurance provider’s initial estimate, your insurance carrier may raise or lower your home insurance premium. It might also require you to make certain repairs before approving you for a policy or renewing your current policy.
Is a home inspection required to get insurance?
No, a home inspection isn’t required to get a homeowners insurance policy. However, because claims cost home insurance carriers money, they often try to mitigate their risk as much as they can through home inspections. So, even though inspections aren’t required, it’s common for insurers to request them.
You can generally expect a home insurance inspection in the following situations:
- Your home is older.
- You haven’t had an insurance inspection in the last 10 years.
- You’re switching to a different insurance provider.
- Your insurer can’t calculate the replacement value of certain personal belongings.
Appraisals vs. inspections
Appraisals and inspections are two terms that are sometimes used interchangeably, but they’re not the same. A home appraisal is an opinion of a property’s value. A professional appraiser, who has a specific certification or license to look at a home and compare its value to similar homes in the area, typically performs the appraisal.
Factors like local market conditions, the age of the home, home features, updates and renovations, the size of the home, and home design can all impact a home’s value. An appraisal is usually part of the closing costs that you pay as a buyer. But you can always negotiate with your seller to cover it.
A home insurance inspection, on the other hand, is a visual evaluation of a home’s condition to determine whether it’s structurally sound. It involves an inspector who walks through the property and looks for potential issues.
Learn More: Types of Homeowners Insurance (Policy Forms)
How can I prepare for a home insurance inspection?
If your home insurance carrier requires an inspection, they’ll let you know that it’s been scheduled. Depending on the inspection, it can take anywhere from an hour to several hours.
- Gather documents that show the home’s square footage.
- Collect receipts for any updates or renovations that have been performed.
- Remove debris from the roof and replace any missing shingles.
- Clean out the gutters.
- Examine the walls and ceilings for stains, cracks, and water damage.
- Wipe down the windows.
- Inspect the HVAC system and correct any issues.
- Check the attic and basement for water damage.
- Test all smoke and carbon monoxide detectors.
- Get rid of any mold or mildew.
What is a four-point inspection?
A four-point inspection is less comprehensive than a full home inspection. It was created to help home insurers understand how a home is aging and being maintained. This type of inspection only focuses on the four major systems of a property:
- Electrical system: The electrical system involves electrical wiring and electrical panels. Inspectors will keep their eyes out for red flags like knob-and-tube wiring, fuse boxes, and double-tapped breakers.
- Plumbing system: The plumbing system includes the water heater. Inspectors will identify issues such as water damage, water leaks, and improper traps.
- HVAC system: The HVAC system consists of heating, ventilation, and air conditioning. Inspectors will focus on functionality and the approximate life left on the system.
- Roofing: Roofing entails the roof covering and roof shingles. Inspectors look for things like roof leaks, loose shingles, and missing fasteners.
The International Association of Certified Home Inspectors offers a universal form for four-point inspections, but using this form isn’t legally required. Home insurance carriers usually require four-point inspections for older homes, as they pose a higher risk and are less likely to meet building codes than newer properties.
Even if you prepare for a four-point inspection, you might miss something and fail it. If this does happen, your insurance carrier can deny coverage or cancel your policy.
What happens if my house fails a home inspection?
Your house may fail a home inspection for a number of reasons. If you know you have water damage in your basement, for example, but don’t do anything about it, your property will likely fail.
Other common reasons for home inspection failures include findings of radon, carbon dioxide, asbestos, or lead paint, which can lead to major health issues, or chimney cracks that may cause a fire.
If your property doesn’t pass a home inspection, your insurance carrier must send you a written cancellation notice. In most cases, you’ll have at least 30 days to address any issues or discuss the cancellation.
As long as you make the recommended repairs within the stated time frame, your insurance provider will reinstate your policy or write you a new one. If you believe the cancellation was unfair and wish to dispute it, you can file a complaint or ask for remediation with your state’s insurance department.
Another option is to shop around for a policy from a new insurance carrier. Just keep in mind that the new insurer will likely require an inspection, so you’ll still need to fix all issues and ensure your house is in good shape.
How to save on homeowners insurance
Homeowners insurance can be pricey. Fortunately, you can reduce your home insurance costs in several ways, including:
- Compare quotes. Not all home insurers are created equal. That’s why it’s a good idea to shop around, get quotes, and compare the premiums, coverage options, and customer service of a number of providers.
- Ask about discounts. Many home insurance carriers offer a variety of discounts. Depending on your situation, you may land a discount for paying your bills on time, enrolling in automatic payments, buying a newer home, or being affiliated with a certain business or organization.
- Bundle your policies. If you have auto insurance or life insurance through one insurer, you might be able to score a multi-policy discount if you choose them for home insurance too.
- Raise your deductible. A deductible is the amount of money you pay out of pocket before your policy kicks in and starts to cover costs. Increasing your deductible can lead to a lower premium. Just make sure you can afford the higher out-of-pocket costs in the event that you file a claim.
- Enhance home security. Upgrading your home security and safety might help you score lower rates. Most insurers offer discounts to policyholders who invest in devices like home security systems, smoke detectors, fire alarm systems, and sprinkler systems.
- Improve your home. You may also lock in a discount if you upgrade your home in a way that protects it from damage. You could do this with a new roof or new electrical and plumbing systems, for example.
- Boost your credit score. In most states, insurance providers use insurance scores when calculating rates. Even though insurance scores aren’t the same as credit scores, they’re based on factors like your payment history, credit mix, and outstanding debt.
- Get rid of risky features or improve their safety. Some features can pose a major risk and increase your home insurance premium, such as swimming pools, trampolines, and treehouses. Putting a fence around your pool, for example, may help you save money on your premium.
