As a property and casualty insurance company underwriter working on issuing new homeowner’s insurance policies, your decisions include property inspection choices. You decide whether a property inspection should be undertaken for a particular proposed policy and, if so, what type of inspection is best suited to your needs. Several types of home insurance inspections exist, ranging in complexity from a simple exterior photo report to a complete high-value interior/exterior inspection.
The Different Inspection Types
The quickest and least expensive home insurance inspection, the exterior photo report, may be appropriate for a newly built home that has just passed a number of inspections required of home builders to obtain a certificate of occupancy. Photographs and/or videos are taken of the property in order to verify the address and location.
These photos will include the residence from all four sides and will include pictures of the rooftop, using either a camera pole or a drone fitted with a camera. Photos will also be made of any outbuildings and of any observable negative conditions found on the building’s exterior.
Two other types of exterior inspections include the exterior observation photo report and the exterior observation and measurement photo report:
- Exterior Observation – Includes a basic photo report plus complete data indicating construction type, roof type, occupancy type, detailed location and proximity to any water, general property condition, and comments on any observed negative conditions.
- Exterior Observation and Measurement – Includes an exterior observation report plus a detailed diagram and a replacement cost estimate.
High-Value Interior/Exterior Inspection
This most complete inspection includes detailed photos of the property’s interior and exterior, detailed diagrams, and a complete conditions and hazards report. A detailed replacement cost estimation is given and a complete and detailed inspection conducted, from attic to foundation, including a 4-point electrical, HVAC, plumbing, and roof inspection.
Poor condition or operation of any of these four systems can represent a major liability to an insurer and a detailed inspection and condition report is important to your underwriting efforts.
Who Needs What and When
Not every one of your policyholders may require a home inspection, or some may qualify to conduct their own self-inspection. Certain situations may indicate the need to conduct a home inspection, such as:
- A home that hasn’t had an inspection for the past 10 years
- The home is an older structure
- The homeowner is switching insurance providers
- It’s difficult to determine an accurate replacement cost of the home or certain items within the home
A home insurance inspection has two primary purposes: to ascertain an accurate replacement cost estimate for a property in the event it’s totally destroyed by a covered peril and to uncover any potential risks that could be the cause of future insurance claims against the policy being issued. As the underwriter, you may submit a report of these potential risks that have been uncovered to the homeowner to mitigate prior to the policy being finalized.
Inspections are typically conducted within 30-90 days after a home insurance policy is issued, with the understanding that anything found during the inspection that would alter any part of the policy will be considered before it’s finalized. Any potential risks not mitigated by the homeowner will likely cause an adjustment to the policy cost and may even cause a policy denial. If it’s found that the estimated replacement cost of a property is inaccurate this may also cause the policy to be altered to reflect a more accurate amount of coverage which, in turn, will alter the policy cost.
Various Home Insurance Inspection Benefits
As mentioned earlier, the two main purposes of a home insurance inspection are to ensure an accurate estimate of the replacement cost in the event a property gets damaged or destroyed and to uncover any existing risks (liabilities) that were not indicated by the information received on the homeowner’s policy application.
There are, however, other benefits to having a home inspection conducted, several of which benefit the homeowner. These include:
- Since the inspector is looking for potential liabilities or risks that could be the cause of future claims, uncovering these can benefit the homeowner. Once known, these risks can be dealt with, thereby making the home a safer place for those who live in or visit the property.
- Some home insurance providers offer discounts to homeowners who maintain certain security features such as monitored fire alarm systems, burglar alarms, or other anti-theft devices such as window burglar bars.
- Inspectors can help homeowners ensure their coverage amounts are as close as possible to the realistic amount needed, ensuring the coverage a homeowner is carrying is neither too much nor too little.
Particulars of a Complete Home Insurance Inspection
A complete home insurance inspection takes in both the home’s interior and exterior. Here’s what’s included:
- Check the foundation for any cracks or unevenness
- Check exterior walls including the condition of any siding
- Check doors and door locks
- Check the roof for damaged or missing shingles and any debris
- Check gutters and downspouts for proper attachment and no blockages
- Check chimney for any visible damage and unobstructed airflow
- Check the yard for any trees with dead branches hanging over the house
- Check additional structures such as a detached garage, sheds, or fences
- Check the condition of gates and walkways
- Note any high-risk equipment like trampolines, treehouses, or swimming pools
- Check for proper installation, condition, and working order of all home systems, including HVAC, plumbing, and electric
- Check for proper chimney airflow and damper operation
- Ensure correct fire extinguisher size, charge, and placement
- Check for correct placement and operation of smoke and carbon monoxide detectors
- Inspect attic for mold and infestation
- Inspect basement for water damage or mold
- Check ceilings for any cracks or mold
Pride of Ownership
A sense of a homeowner’s pride of ownership can say a lot about how they take care of their home, which in turn can be a clue to the likelihood that they will file future claims with your company. A good home insurance inspector will not only provide you with objective data regarding a property but will offer subjective insights regarding how a homeowner cares for his or her property. Debris littering the yard, for example, can show a lack of pride in ownership and may indicate an individual who poses a higher risk of future liabilities. Broken steps on the porch or cracks in the walkways both pose trip and fall risks and, left unattended, are an unwanted liability to any insurer. Unmitigated, they also show a lack of pride in ownership.
Don’t Expect What You Don’t Inspect
A quality home insurance inspection is an important tool in a P&C underwriter’s toolbox and can provide you with valuable data unobtainable elsewhere. Today’s technological advancements make inspections quicker, easier, and more thorough and, as an underwriter, this makes your job more expedient, more convenient, and more revealing.
Insurance Risk Services provides a full slate of inspection types and underwriting field services to meet your home inspection requirements. For four-plus decades they have been serving property and casualty insurance providers across the nation and look forward to assisting you in your insurance underwriting efforts. Contact them here.