Why does my homeowner's insurance want a four point inspection?
Monday, October 22, 2018
Insurance company statistics show that homes more than 30-years old have more claims than newer homes. Plus the claims are often due to a deteriorated condition of older building components. So, as a loss-prevention measure, many insurance companies now require an inspection of key home components of an older home before they will issue a policy--to see if they are in serviceable condition or have been replaced/upgraded since the home was built.
Most established town have numerous homes dating back to the early 20th-century and beyond, plus a plentiful supply of 1950s and 1960s era houses, we are often asked to prepare 4-point inspection reports for homebuyers. The age of the home at which a 4-point inspection is requested depends on the insurance carrier. More than 30-years old is the threshold for some companies, while others are more lenient and start at 40 or 50-years old. One company, Citizen’s Insurance, now requires a four-point inspection for both new policies and renewals of homes or mobile homes over 30-years old.
There are a few companies out there that will write insurance on an older home without a 4-point. But the policies are for created primarily for short-term use for an unoccupied home under construction, and are much more expensive, so being able to provide an underwriter a 4-point inspection report without any defects means you will save money.
The four points are: 1) roof, 2) plumbing (including water heater), 3) electrical, and 4) heating/air conditioning system. Because the inspection is provided for the benefit of the insurance company, not you, it only covers the areas they are concerned about. It is not a full home inspection and should not be relied upon to determine the condition of a home you are considering buying. In essence, it is an abbreviated inspection of the key components of a home which, if they fail, will likely lead to an insurance claim.
You cannot do the inspection yourself. It must be completed, and signed, by a licensed home inspector, building contractor, architect, or engineer. If the inspection uncovers deficiencies, sometimes the company will go ahead and issue the policy, giving you a grace period to complete the necessary repairs. Then again, they may also refuse to issue a policy until they are satisfied with the condition of the home, and another inspection may be necessary.
Each insurer has their own standards, and what one company accepts may be required to be repaired or replaced by another company. So there are no set standards, but certain deficiencies almost all insurance companies require to be repaired. Here’s our “Top 10” list:
1) A roof with any leaks at all, or an older roof, typically over 15-years old for a 3-tab asphalt shingle roof, for example. An estimated additional roof life of 5-years is the usual standard for a roof to be acceptable.
2) An electric panel with screw-in type fuses.
3) Newer 3-slot type electric receptacles connected to old wiring that does not have grounding.
4) An older water heater, typically more than about 30-years old.
5) Lack of an installed heating system. Window a/c units or plug-in portable heaters are not considered “installed.”
6) Any evidence of plumbing leaks or other water intrusion into the home, even previous ones.
7) Older knob-and-tube wiring that’s still “live.”
8) Exposed, amateur electrical wiring, especially open electrical splices.
9) Deteriorated, damaged, or unvented plumbing piping.
10) Deteriorated washing machine hoses.
If you are purchasing a home and have already had a home inspection done, unfortunately you cannot submit the home inspection report as an alternative to a 4-point inspection (also sometimes called a “4-point letter). But the good news is that many home inspectors, including us, offer a discounted price for a 4-point inspection report done at the same time as a home inspection.
And the inspection is not as daunting as you might think. About 40% of the older homes that we inspect have no deficiencies that require repair, and a significant portion of the rest of them need only minor repair or replacement work.
The big-ticket item and #1 obstacle to getting a good 4-point report is an older roof that needs replacement. If your roof is in good condition, you will likely have little or no problem with an insurer that requires a four-point inspection.
To learn more, see our blog post How do I get my home ready for a four point inspection for insurance?
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Here’s links to a collection of our other blog posts about INSURANCE:
How To Look At A House
McGarry and Madsen's home inspection blog for buyers of
site-built, mobile/manfuactued and modular homes
for Links to Collections
of Blog Posts