During a typical home-buying process, many prospective homeowners will get an inspection on the home to ensure that there are no hidden problems that they can’t see. This process is done following the acceptance of an offer but before closing on the home.
Home inspections can encompass many different things, from general home inspections, to termite and pest inspections, to pool or chimney inspections, depending on the specifics of the home in question. In all cases, a licensed professional will take a look with their trained eyes for any issues the homeowners might want to be aware of.
Inspections aren’t a required part of the home-buying process, though. In fact, some buyers will offer to waive their right to inspection as a bargaining tool during a hot real estate market to stand out from other potential buyers. But, can you get home insurance without an inspection?
The answer is that it depends on a few different factors. We’ll dive into those below.
Do Home Insurance Companies Require an Inspection?
Legally speaking, home inspections aren’t required for a homeowner to obtain a home insurance policy. That being said, most insurance companies will require one to be done before they’ll issue a new policy.
The reason for this is the insurance carrier wants to know what risk level they may be taking through the insurance policy. It helps them to decide what premiums to set for the policy, or whether to even offer the policy in the first place.
A general home inspection will allow both the homeowner and the insurance company to identify any issues that otherwise might not be disclosed during the home-buying process. In fact, some of the issues that could be brought up during a home inspection may not even be known by the seller of the home.
This could include potential major issues such as faulty deck, problems with a roof or an unstable foundation. It could also include minor issues to pay attention to, such as cracking in a driveway or downspouts that aren’t long enough.
This is why most real estate professionals will strongly suggest to their clients to get a home inspection prior to purchasing a home.
What Factors Would Require a Home Inspection?
Again, there aren’t specific factors that would make a home insurance carrier require an inspection before offering a new insurance policy. However, there are some factors that could increase the likelihood that they would require one.
This includes if the home is older, if you’re looking to switch insurance carriers, if a home inspection hasn’t been conducted on the property within 10 years and if the insurance company isn’t able to identify that the replacement value of the home — or some specific items — might be.
These factors are different than what other entities that are involved in the home purchase would require. For example, certain lenders may require a home inspection if they are to offer you a mortgage. Some specific types of mortgage, such as an FHA loan, would also require a home inspection before the mortgage can be approved.
So, it’s important to understand that there are different entities involved in the transaction, and they all might have a different reason for requiring a home inspection, or not.
What is a Home Insurance Inspection?
Even if you want to forego a general home inspection, your insurance carrier may require a home insurance inspection to be completed. During this inspection, the inspectors will use an inspection method that’s known as the four-point method.
This will allow the inspectors to evaluate the home’s major area, including its HVAC (heating and cooling) equipment, electrical, plumbing and roof. The reason that these items are included in this inspection is that they all have a lifespan that is set.
Through the information gathered in this four-point inspection, insurance companies will be able to determine how likely it might be that you would need to file a claim. If the HVAC equipment is 17 years old and the expected lifespan is 20 years, for example, the insurance company may determine that you would be at higher risk of filing an HVAC-related claim in the first few years of your policy.
The home insurance inspection will only flag potential areas that might need work. Since these inspectors aren’t licensed to actually specifically diagnose the problems, homeowners would need to hire contractors to fully assess the issue and then fix it.
If the home fails any part of the four-point inspection, then the insurance company will likely not offer a home insurance policy until the homeowner can prove that the issue has been resolved. Any issues that may arise as part of the inspection would also be on either the buyer or seller to pay for, depending on the negotiation process.
Work with a Home Insurance Company You Can Trust
If you are in the process of buying a home, you may be deciding whether or not you should get a home inspection. While many real estate professionals would suggest that you get one done, there may be reasons why you decide to forego one.
That being said, it’s important to note that even if you don’t want to pay for a whole home inspection, your insurance carrier may require a home insurance four-point inspection to be completed.
If you’re unsure of what this might entail or whether it would be required of you, contact your local insurance agent for more details.
It’s always important to work with a home insurance company that you can trust, as it helps reassure you that your most valuable asset will be protected from the ground up. In Michigan, Signature Insurance is that company.
We have been covering home owners like you for years now, and help walk all of our customers through every step of the process, from start to finish. Contact us today for more information and for a free quote.