As a new homeowner, you may be surprised when your insurance agent requests a home insurance inspection. After all, you just purchased the home and had it inspected prior to the purchase - why does your home need to be inspected again?
A home insurance inspection is different from a home mortgage inspection. When your home was inspected prior to purchase, this inspection was to assess the home’s general condition, review electrical and plumbing systems, and to look for signs of water damage, termites or other infestation according to the Insurance Information Institute. Now that the sale has closed, homeowners insurance is essential to protecting your investment. An insurance inspection is intended to assess your home’s replacement value and make sure that your insurance policy provides adequate coverage in the event of a total loss.
There are two primary reasons to have a home insurance inspection:
- Validate your home’s replacement estimate as calculated by your insurance agent. When you receive an initial quote for your policy premium, this quote is based on a replacement value calculation. This calculation is different from the market value, which is what you paid for the home or the listing price you could sell your home for. In order to ensure the calculation is correct and validate the true cost to rebuild in the event of a total loss, your insurance agent may request an inspection.
- Identify unsafe conditions that increase your liability. While your home may appear safe to you, the inspector can identify potential hazards you may have overlooked that could be a liability. For example, a deck with wobbly handrails or a pool without adequate barrier protection could be safety disasters waiting to happen. By identifying these concerns prior to an accident, you can take immediate steps to reduce your liability exposure and minimize the risk of an otherwise avoidable problem.
The home insurance inspection is generally a simple, straightforward process. The inspector will check the general condition of your home with a top-to-bottom physical review, including taking measurements, as well as look at other features of the home. The inspector will also look for areas where potential problems may develop, like the deck with unsafe handrails or the pool without an appropriate fence. During the home insurance inspection, the inspector may also identify additional home features that qualify for an insurance discount. For example, central fire and burglar alarms, which also have a low-temperature sensor, which could result in additional savings.
Keep in mind that a home insurance inspection, like a mortgage inspection, cannot reveal hidden problems like asbestos or mold. If you are concerned about these issues, consider hiring a specialized inspector to evaluate the home prior to purchase.
A home inspection is not a “pass/fail” exam. Unless there’s a major issue with your property that precludes your ability to qualify for homeowners insurance, the inspection will not prevent you from getting a policy. What the inspection will do, however, is ensure that you have the right policy for your needs. The inspector is here to look out for your best interests and ensure that should your home be damaged or destroyed, you will have adequate coverage to repair and rebuild.
If you have recently completed a major remodel or addition to your home, you may also need a home inspection in order to update your homeowners coverage. Talk to your insurance agent about any changes you have made to your home and ask whether a new inspection is needed.