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A home inspection aims to identify probable safety risks and exposures for potential homeowners or current home insurance policyholders. Those in the market for a new home can use the report results to negotiate for a lower sale price and insurance companies use the information to require policyholders to make updates that help mitigate the risk of loss. It is typical for home insurers to request an insurance home inspection when issuing a new insurance policy or when a homeowner has made repairs or modifications to the home. Failing to comply with the results of the insurance home inspection can result in changes or limitations to policy coverage or cancellation. Bankrate’s insurance editorial team explains when you might need a home inspection to get homeowners insurance.
Do I need a home inspection to get insurance?
In many cases, a home inspection is required in order to obtain a homeowners insurance policy. Insurance carriers need to understand the level of risk they are taking on by insuring your home in order to set your premiums. The best way for them to assess this risk may be through a home inspection. Not only is this helpful for insurers to evaluate the likelihood of you filing a claim, but a home inspection is highly recommended by most insurance professionals when purchasing real estate as it may help you identify hidden issues that otherwise would not be disclosed to you.
Not all insurers require a home inspection to obtain coverage. Some scenarios may increase the likelihood of a home inspection for insurance:
- Living in an older home
- Switching carriers
- An inspection has not completed in the last 10 years
- Replacement value on certain items cannot be identified without one
Additionally, other entities involved in your real estate transaction may mandate an inspection. If you are working with a lender, they might stipulate that a home inspection be completed before they approve your mortgage loan. If you’re selling your home, a home inspection is usually not required. However, sellers are usually required to have an appraisal done to determine the home’s value.
Can I use an appraisal to get homeowners insurance?
Your homeowners insurance provider might accept an appraisal in place of a formal inspection, however, this is up at the carrier’s discretion. Typically, the more recent and detailed the appraisal, the more likely the insurance company is to accept the appraisal in lieu of a home inspection. However, appraisals do not serve the same purpose as inspections and are usually much less thorough in discovering potential risks. Especially if the home you plan to purchase is particularly old, you will most likely need an inspection completed rather than an appraisal.
If your insurance provider does accept an appraisal, the seller will have this information available since they typically need to pay for an appraiser to evaluate the home before placing it on the market. By contrast, home inspections completed during the home purchasing process are paid for by the homebuyer. In many cases, homebuyers will submit an offer on a property contingent upon home inspection, meaning they may legally back out of the contracted sale if the home inspection does not meet their expectations.
What to know about a home insurance inspection
Home inspections are comprehensive evaluations of your home or property that aim to identify any underlying issues that might exist. An insurance home inspection allows insurers to understand the level of risk they would assume by offering you a homeowners insurance policy. During a home insurance inspection, inspectors generally use the 4-point inspection method to evaluate key areas of the home. This 4-point home inspection focuses on the following:
- Heating & Cooling Equipment (HVAC)
These items have a set lifespan, and insurers can use the information gathered through the home inspection to determine the likelihood that you might file an imminent claim. However, home inspectors do not have the qualifications necessary to perform a detailed analysis of any needed repairs. For example, if the home inspector flags your plumbing system as needing work, you will likely need to hire a professional plumber to actually identify the specific repair required to fix the problem.
If the property you plan to purchase fails the 4-point inspection, you will likely not be able to purchase a homeowners insurance policy until the existing issues are remedied. Any expenses you incur from having the work complete, including replacing items like an HVAC system to pass the home inspection, are yours to pay and not the responsibility of the insurance company or inspector.
What else will be inspected?
A 4-point home inspection is not as comprehensive as a whole-home inspection, and therefore is not necessarily recommended for buyers to rely on when making a purchasing decision. Instead, a whole-home inspection may be a better option as these evaluations analyze many additional areas of the home, including:
- Chimneys: Inspectors will likely look for any loose bricks or cracks that might allow moisture or pests to enter the home, or smoke to escape, posing a fire risk.
- Water and mold damage: Black mold, basement moisture, cracks in the foundation and more may all be identified through a whole-home inspection.
- Pests: Your home inspector will typically look for any evidence that termites, rodents and other unwanted pests exist in the home.
- Lead-based paint and asbestos: These dangerous materials were used in the construction of older homes, and may be identified by your whole-home inspector during their evaluation.
Tips for passing a home inspection
When scheduling a home inspection on a home you do not yet own, be sure to communicate with the seller regarding the date of the inspection. If you do not own the house, preparing for the home inspection will be the seller’s responsibility. If you do own the home, or if you are a seller preparing a home for inspection, there are many things that you can do that may increase your chances of passing a home inspection:
- Complete necessary yard work: When preparing for a home inspection, it may be a good idea to trim tree branches hanging too closely to your roof or home. Walk the perimeter to ensure all dirt and mulch is at least six inches from your home’s siding, and ensure all shrubbery is at least a foot from the home.
- Inspect the exterior: Inspect your siding for peeling paint, warped boards, gaps, cracks and other damage. Be sure your caulking and weather stripping is secure around doors and windows, and that they do not expose any nails. Look for any foundational cracks or damage, and ensure the gutters are cleaned and in working order.
- Prepare your plumbing: Test your sinks, showers, tubs, faucets and drains for clogs and drips. Be sure to identify any leaks that may exist and ensure your toilets do not run when flushed. Inspect your crawl space or basement for any leaks or water damage that need repair.
- Examine your electrical: Check that your lights, switches and outlets all function properly. Test your HVAC equipment as well to ensure electrical connections work as they should. Replace air filters in your heating and cooling equipment and make sure they are clean and clear of debris.
- Do a deep clean: Take care to thoroughly clean all areas of your home, including appliances, attics, crawl spaces, plumbing fixtures, HVAC equipment and more. If you have pets, it may be a good idea to either take them with you or keep them safely locked away during the inspection.
By taking the time to prepare ahead of the inspection, you may increase your chances of passing and obtaining the necessary insurance coverage.
What happens if my house fails the home inspection?
If you fail an insurance home inspection, it is likely still possible for you to obtain a homeowners insurance policy. In some cases, an insurer may issue a policy that stipulates you must make certain repairs within a set time frame (typically a 30-day period). For example, if your roof is damaged and in need of dire repair, your homeowners insurance provider might require you to have it replaced within a certain period of time in order to keep your policy in effect.
Some older homes in extreme disrepair or that haven’t had the plumbing and electrical updated may not qualify for standard home insurance. When this happens, you may have better luck finding coverage through companies that specialize in insuring high-risk properties. Insurance carriers in the excess and surplus markets are typically able to take on more risk than a standard carrier whose policies are financially backed by the state’s insurance department, which might make it easier for you to obtain coverage for higher-risk properties.
In some cases, you still might not be able to find coverage through the surplus market. If that’s the case, you may be able to get insured through your state’s FAIR Plan. The Fair Access to Insurance Requirements Plan may be available in certain high-risk areas in your state where private home insurance coverage isn’t available. These plans are usually more expensive than those offered through the voluntary market and are intended as a last-resort for homeowners that are unable to obtain coverage through traditional means.
Frequently Asked Questions
Home inspections are typically paid for by the homebuyer as part of the real estate transaction process. In many cases, a homebuyer may submit an offer on a property contingent upon a positive home inspection. That means you can legally walk away from the contracted sale or submit a lower offer if the home inspection fails or comes back otherwise unsatisfactory. If the insurance company requires a home inspection, the insurer will typically cover the cost.
The home inspection cost can vary, costing anywhere from $250 to $400. Homeowners and potential buyers usually pay the cost directly to the home inspector. For insurance purposes, the home inspection cost is typically free to the homeowner and paid by the insurance company requesting the inspection. If you are asked to pay for a home insurance inspection, you may contact your insurance agent or company to find out if this is correct before paying the inspector.
How long a home inspection takes may depend on factors such as the size of the home, the scope and detail of the inspection and how many inspectors are present. Typically, a single inspector will take three to four hours for the average home size, but a team could get the same inspection complete in an hour or two. A 4-point home inspection could take an hour or less, as it is not as detailed as a whole house home inspection for insurance.
During a home inspection, it is common for insurance companies to take pictures of your house. The home inspector may take pictures of the interior and exterior of your home as well as your yard, especially if they identify a hazard that may need correction. The pictures may help the insurer identify potential risks or hazards and document current conditions. If the inspector finds items that need to be fixed, then the carrier may request new photos to verify the correction after it has been fixed.
Depending on your insurance provider and the inspection reason, you may not need to be present for an insurance home inspection. When starting a policy with a new insurer, most standard home inspections focus on the exterior of the home including the roof, other structures and potential risks from falling trees, pets and attractive nuisances, like a swimming pool. If the inspection is required to confirm completion of interior repairs, you will probably need to be there.