How do I get insurance if my home can't pass a 4-point inspection?
Friday, October 26, 2018
Most insurance companies require a satisfactory 4-point inspection report be submitted to them before they will insure an older home—typically more than 40 to 50 years old or so, depending on the company. The purpose of the inspection is to determine if there are any deteriorated or unsafe conditions in the home that have developed due to its age, which have the potential to cause an insurance claim in the future. The four “points” are: roof, plumbing, electrical, and heating/air conditioning. To learn more about 4-point inspections and what are the most common 4-point defects, we suggest that you read one of our other blogs at Why does my homeowner's insurance want a four point inspection?
But if the inspector turns up so many defects during the 4-point inspection that the insurance company declines to insure the property until they are fixed, there is another option. It’s called a “builder’s risk” or, sometimes, a “vacant property” or “surplus lines” policy, and is often purchased by remodelers that buy uninhabitable houses in order to have insurance while they are repairing them for resale.
One company that writes this type of policy is Tapco Insurance Underwriters. You cannot buy the policy directly from the company, and need to find a local independent insurance agent that represents them.
There are virtually no requirements, other than providing an address, in order to secure this type of insurance. The downside is that it’s expensive; so you only want to use it for as long as it takes to get the house improved sufficiently to pass a 4-point inspection. The minimum policy term offered is usually 6-months.
As far as we know, no company offers this type of policy for a manufactured/mobile home. Also, many policies include a clause that does not allow you to get a refund for the unused portion if you complete your repairs quickly, and want to cancel and switch to standard homeowner’s insurance before the end of the policy term.
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To learn more strategies for getting the best possible home inspection, here’s a few of our other blog posts:
To read about issues related to homes of particular type or one built in a specific decade, visit one of these blog posts:
How To Look At A House
McGarry and Madsen's home inspection blog for buyers of
site-built, mobile/manfuactured and modular homes
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of Blog Posts