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Home Insurance Inspection: What to Expect?

Find out what to expect during an inspection to confirm your homeowners insurance coverage, including what parts of the home will be checked most extensively.

Some people finance a house and others pay cash for a property.

Either way, homeowners insurance is one of the best ways to protect your asset

These policies cover losses and damages to a primary house. This includes losses or damages from theft, fire, storms, and other events.

Oftentimes, homeowners pay this insurance through an escrow account. Although you can also make payments to your homeowner’s insurance provider. 

Comparison shopping is an excellent way to get a great rate.

Furthermore:

Before getting a policy, some insurance companies will conduct a home inspection.

Here’s what you need to know about home insurance inspections. Including why they’re required and what you can do if your property fails the inspection.

What Is a Home Insurance Inspection?

When getting any type of insurance policy, there’s usually an underwriting process. This helps determine whether you’re eligible for insurance. It also determines how much you’re charged. 

This is how it works with car insurance, life insurance, and health insurance. Not surprisingly, homeowner’s insurance also has an underwriting process. 

Insurance is to repair a home and replace belongings.

But, the reality is:

Companies that offer homeowner’s insurance want to minimize claims as much as possible. 

For this reason, they sometimes conduct a home insurance inspection.

This takes place before issuing a policy.

Inspections serve many purposes.

Identify risks

One purpose is to identify risks that could pose a safety danger or create a loss.

It’s a way for the insurance company to assess the risk of insuring your property.

Potential savings

They also perform inspections to help you save money.

Homeowners can save in various areas.

And by conducting an inspection, the inspector can look for features that qualify for a discount.

Ensure proper coverage

A home insurance inspection also ensures receiving enough coverage for the property.

Sometimes, it’s difficult to determine the right amount of insurance coverage. If you don’t get enough coverage, the policy may not cover a loss.

And if you get too much coverage, you could end up paying more for insurance than necessary.

What Type of Homes Need an Inspection?

But although home insurance inspections occur, it’s a process that’s unfamiliar to some. This is because these inspections aren’t always required with a new policy. 

Each individual insurance company decides whether they’ll inspect a particular home.

In most cases:

They only require a home inspection when a home is 25 years or older.

For newer properties or newly constructed homes, many insurers will insure a property without an inspection.

In this case, the company might still send an inspector to survey the exterior of the house. 

What to Expect During a Home Insurance Inspection?

During the home insurance inspection process, the inspector often conducts a four-point inspection.

This is an inspection that examines some of the property’s major components. 

This includes:

  • the plumbing system
  • the HVAC system
  • the electrical system
  • the roof

Inspectors focus primarily on these features because these are the areas most likely to cause issues in the future.

An old or damaged roof can cause extensive water damage. This can also happen with outdated plumbing or a poorly maintained HVAC system. If left untreated, water damage can lead to a costly mold problem.

Also, the inspector gives attention to the electrical work. This is important. Defects or problems with the home’s electrical system could cause a fire. 

The inspector’s job is to assess the property. They’ll notify the insurance company of any potential risks.

The inspector’s report also helps determine the amount of coverage you’ll need.

So they’ll take note of features within the home.

Their report will list the quality of materials within the home. It also lists the square footage of the home and recent updates. 

Safety features

They’ll also look for safety features. These include an alarm system and smoke detectors.

This also helps you receive adequate coverage at the best rate.

Exterior structures

A home insurance inspection also identifies structures on the property that could impact your coverage and rate. This includes having a detached shed, a detached garage, a swimming pool, or a trampoline.

The inspector completes the inspection and submits the information to the home insurance company. Your insurance agent may then call with recommendations.

How to Prepare for a Home Insurance Inspection

Even though the insurance inspector completes their own assessment, you can prepare for the appointment

Your insurance agent might suggest having a few items on hand to share with the inspector.

This includes property records confirming the square footage of your house. You can also provide a list of recent home renovations. This includes receipts or other information about costs. 

You can list security features you’ve added.

Also, provide details on when you last updated the roof, windows, plumbing, etc.

As a bonus:

You can prepare for this inspection by cleaning the house and removing clutter.

Too much clutter can pose a fire risk. Depending on the extent of clutter, your home might not pass the inspection.

What Happens If the Home Fails the Insurance Inspection?

Look:

Sometimes, a property doesn’t pass the home insurance inspection.

If so, your insurance agent will provide information on how to make your home insurable. 

A lot of times, it’s a matter of fixing issues on the insurance report. This can vary.

For example, your insurance company may require replacing an old roof. Or perhaps updating the plumbing before you’re eligible for a policy. The company might also require that you replace aluminum wiring with copper wiring. 

Repairs in a timely manner

Failing an inspection doesn’t mean that you can’t get insurance. Your insurance company might still write a policy.

But they might include a clause that states you must complete specific repairs within a certain time. If you don’t correct these issues, the company can cancel your policy.

When repairs are unaffordable

Of course, some home repairs might be too expensive to fix — at least at the moment.

In this case, you’ll need to contact an insurance company that insures high-risk properties. You can find this type of coverage from private companies and through your state. 

The insurance company that denies your policy can provide more information. Understand that these high-risk policies are more expensive.

How This inspection Differs From a Home Inspection and Appraisal

Some people might confuse a home insurance inspection with a standard home inspection or an appraisal. 

If you’re buying a home, the latter two are common steps in the process.

But they’re not the same as a home insurance inspection. The main difference is that your insurance company conducts a home insurance inspection.

A standard home inspection is optional when buying a home. This is when you pay a home inspector to check the home before buying.

This inspector examines the property for hidden problems that can be costly in the long run. 

Similarly:

They’ll check the home’s electrical, plumbing, HVAC system, and roof, too.

Also, inspectors examine other areas of the home. This includes the foundation, chimney, and attic.

An appraisal is a type of inspection required by a mortgage lender. The purpose of this inspection is to assess the value of a property. 

The home appraiser conducts a brief walkthrough of the home, making note of the home’s features and square footage.

Your mortgage lender chooses the third-party company for the appraisal. Although you’re responsible for the appraisal fee.

Appraisals are necessary because mortgage lenders don’t lend more than the value of a home.

Final Word

A homeowner’s insurance policy is one of the best ways to protect your biggest investment.

Yet:

Insurance companies also want to minimize the likelihood of claims.

For this reason, home insurance inspections are typical with older properties. 

They not only benefit insurance companies by identifying the risk level. These inspections also benefit you.

An inspection can help you get a lower insurance rate, and it can ensure that you receive adequate coverage for the property.