- To ensure the dollar amount of the coverage being offered is right for the particular property being inspected.
- To identify any risks or potential liabilities that could translate into future claims.
Residential Inspection Options
Depending on a number of factors, your company may not require a residential inspection of certain homes and, for those where an inspection is required, different types of inspections are available. These include a simple exterior photo inspection up to a comprehensive exterior/interior high value inspection. Newly built homes that have recently passed all the required construction inspections may likely not need an inspection or, if one is called for, it could just require the exterior photo inspection which includes:
- Photos of all four sides of the structure
- Photos of out-buildings
- Rooftop photos
- Address verification photo
Older homes (25 years or older) that haven’t been inspected in the past ten years and very large or complicated properties will almost always require the high value residential inspection option. Most homes should at least have the basic 4-point inspection completed as a minimum.
Why Require a Residential Inspection?
The primary purpose of a residential insurance inspection is to uncover any potential liabilities in the home. Insurance liabilities are anything that create risks to the homeowner and, by extension, to you, the insurer, since you’ve contracted to underwrite these liability risks and pay toward any covered claims.
While you will have already received a homeowner’s insurance application that should contain a comprehensive listing of the home’s potential liabilities, a thorough inspection can uncover any liabilities that may have been overlooked by the homeowner. The inspection will also verify aspects of the entire property to ensure that the amount of coverage being issued is at the right level to cover costs if the home is destroyed in a catastrophic loss.
Residential Inspection Benefits to Homeowners
While having an inspection done on your client’s home may seem an inconvenience to the homeowner, a residential inspection, while done specifically for the insurer, may provide several benefits for the homeowner as well. Consider the following:
- While the inspector is looking for risks and potential liabilities that could lead to future claims, discovering these risks that were previously unknown allows the homeowner to identify and then deal with them. This represents a benefit to both the insurer and the insured.
- Items such as smoke and carbon monoxide detectors, burglar alarms and dead-bolt door locks that may bring premium discounts may have been previously unreported until noted by your inspector.
- Homeowners shouldn’t have too little or too much coverage in their homeowner’s policy, and part of a residential inspection will include a look into the coverage amount and verification that it matches up with the situation the inspector finds on-site.
A Great Resource For Underwriters
Underwriting a residential insurance policy is all about understanding the details of a home, including not only the age of the home itself but also the age of the roof and major systems like HVAC, plumbing, electrical, etc. Insurance Risk Services (IRS) is a 35+ year-old service-oriented business with insurance company-clients nationwide. Contact IRS for help in deciding which risks are worth taking.