Various Types of Property Inspections

Various Types of Property Inspections
The property inspection process may be conducted in a variety of ways and may serve a number of different purposes. As a property owner, an insurance inspection may be something that causes concern, although it needn’t be. Many property owners may be subject to an inspection on a regular basis, depending on their occupancy use, and often need to conform to the requirements of a number of different jurisdictions.
Here’s a list of some of the different types of inspections commonly being conducted:

  • City inspections, including fire inspections
  • State inspections
  • Construction/building inspections
  • Bank inspections
  • Insurance inspections

Insurance Inspections
As an insurance company underwriter, you may require a property inspection as part of your underwriting process for two purposes:

  1. To determine an accurate replacement cost if the property being insured is destroyed by a covered peril
  2. To uncover any liability risks that will determine the insurability of a property and to come up with an accurate policy price to charge the insured

There are several levels of insurance inspections, ranging from a basic walk around exterior inspection and report to a comprehensive, in-depth interior/exterior inspection to include all major systems such as HVAC, electric, plumbing, rooftop and more. These inspections aid the insurance underwriter in making accurate underwriting decisions and can also help property owners understand the condition and liability risks of their properties.

What Properties Require Which Property Inspection Types
The type of inspection required of a particular property will depend on a number of factors, including:

  • Age of the property
  • Occupancy use
  • Property size
  • Property Value
  • Property complexity

For a new property, newly constructed, a basic exterior photo report may be all that’s necessary. Since a new occupancy has typically gone through a complete series of inspections from inspectors representing the local jurisdiction, a more in-depth inspection is probably not needed. The next step up, an exterior observation report may be called for, especially if there are any bodies of water nearby.

For most homes, a 4-point home insurance inspection is most useful and most requested by insurance underwriters since it provides critical information on the four most important systems found in a home: roofing, electrical, plumbing and HVAC. The 4-point inspection is an integral part of a high-value interior inspection, which is a comprehensive collection of all three lower level inspections offered, plus a complete interior inspection.

Commercial Inspections
While there are overlapping elements with residential inspections, such as the 4-point inspection discussed above, commercial property inspections will address the additional risks a commercial establishment represents. Commercial properties are typically riskier than residential properties, and an in-depth commercial inspection is the best way for an insurance company to become informed of the risks they face in insuring a particular business.

These risks may include liability exposure relating to the number of people typically visiting these properties as well as some of the specific work carried on in those businesses. A proper commercial inspection includes checking for fire safety, taking a close look at mechanical systems such as elevators and ensuring exterior areas around the property are safe for both employees and visitors.

A high-quality property inspection such as those performed by Insurance Risk Services is invaluable to an insurance company’s underwriting efforts. Our business includes both residential and commercial property inspections to provide the information needed by insurance companies to help make their underwriting process more accurate and reliable. Contact Insurance Risk Services for details.