I received an email from one of my insurance company’s underwriters. They wanted to clarify one thing that turned up in the inspection of a home I’d recently written a policy with them for one of my clients. The item the underwriter wanted to confirm was the type of cooling system the home used to see if it met their guidelines. If it did, the policy would remain in force, however, if it didn’t, the policy would have to be cancelled.
Every home insurance company conducts an inspection for each property a policy is written, whether it be a single family home, rental property, townhome, or condo. The purpose of an inspection is to verify the condition of the home and that it meets their underwriting guidelines. Inspections fall into one of three types; drive by, walk around, and interior inspections.
Drive by inspection: As the name implies, the insurance inspector simply drives by the property to provide visual confirmation the home is well maintained and meets underwriting guidelines. As long as everything is visually in order, they may not get out of their car and write their report from the street.
Walk around inspection: If, however, the inspector notices something out of line or that demands a closer view, they will get out of the car and may walk around the property. The purpose is to also confirm the home is in good shape and meets the guidelines of the insurance company’s underwriters.
Interior inspection: Homes 4,000 square feet or bigger (the exact square footage varies by company) or have a value of $400,000 or more (again this varies by company) may require an interior inspection. Interior inspections are typically only performed on high value homes.
The purpose of an interior inspection is to review the home’s condition, as well as to determine if the home is adequately insured. An appointment is scheduled with the homeowner for the inspector to review square footage, as well as, the level of finish out.
They will then run a replacement cost estimate on the home which is then compared with what the insured value of the home constructed by the agent. Underwriting may request the home’s insured value be adjusted.
There are several Items an inspector will examine when reviewing the home’s condition of including:
- Do tree limbs brush against the roof
- Is the roof in good shape and does it appear to be 15 years old or younger
- Are there holes in the walls of soffits
- Are there any cracked or broken window panes that need to be replaced
- Is the foundation in good shape
- Is there any peeling paint
If the inspector identifies items to be addressed, the homeowner is notified and given 60 days to resolve them. Once that’s done, photographic evidence is submitted to underwriting and the policy remains active. If the homeowner doesn’t take care of these items then the company will cancel the policy.
I’ve seen underwriters request homeowners paint a section of a home, repair holes, trim trees & shrubs, and provide proof of foundation repairs. I’ve even contested a high value home’s valuation because the inspector recommended the home’s dwelling value be increased by $350,000 which was out of line. In my client’s case, the home insurance company does not write a policy for a home with a swamp cooler mounted on the roof. This could not be resolved and necessitated I re-write the policy with a different company.
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