In the wake of the mortgage and financial crises, homeowner’s insurance companies are ordering home insurance inspections to reassess the properties they underwrite. These inspections evaluate any current potential risk exposures for the insurance provider. What you don’t know about a home insurance inspection can cost you a lot of money in the form of a canceled policy and/or increased premium.
A home insurance inspection is an inspection of a residential property ordered by the insurance company underwriting the homeowner’s policy.
A home insurance inspector will typically observe the condition of the home and any risks on the property or in the neighborhood. If the insurance company orders an exterior inspection, the inspector likely will not need an appointment to inspect, but if an interior inspection is ordered (often for high value or multi-family homes) the inspector will contact the homeowner to schedule an interior appointment.
Who orders a home insurance inspection?
The insurance company underwriting the homeowner’s policy orders a home insurance inspection from either the insurance agent or a third party inspection service. If the insurance company chooses a third party insurance inspection service, either the insurance company or the inspection service will notify the local insurance agent and the policy holder (homeowner) of the requested inspection.
When is a home insurance inspection ordered?
An insurance company typically orders an insurance inspection in three situations:
1. When the policy is first written, often when the home is purchased.
2. Periodically through the life of the policy when they choose to review and reassess the risks they underwrite.
3. When an insurance inspection reveals a risk the homeowner is then allowed to correct (eg: a missing handrail), the insurance company will order a re-inspection to confirm the risk was corrected.
A home insurance inspection can affect what you pay for your home insurance, and in some cases force you off your current policy and into the far more expensive re-insurance market. Homeowners are often surprised to learn their policies have been canceled due to deferred maintenance seen on the exterior of the home or clutter and debris seen in the yard. Remember, your insurance company may order an inspection at any time, and you should stay on top of maintenance issues. The day you receive notice of an upcoming inspection is not the day you want to start calling around for an estimate on major repairs without which your insurance company will cancel your policy.
Additionally, there are risks that do not cause your policy to be canceled, but which can increase your premium or force a rider to your policy. For example, some insurance companies won’t carry a policy on a home with a trampoline; others will, but at a higher premium. If no one in your family uses the old trampoline in your yard anymore, you may be able to save your policy, or save money on your premium, by removing the trampoline before a home insurance inspection.
When you are notified your insurance company has ordered a home insurance inspection you should understand this is likely a standard review. It is wise to clean up the yard and make any necessary repairs. Always keep the possibility of an inspection in the back of your mind so you will be motivated to maintain the exterior of your home and think twice about adding risk exposures (like a vicious dog or a swimming pool) to your property.
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