When getting or renewing homeowners insurance, you may be asked to have a 4-point inspection report. The inspection is a comprehensive evaluation of an existing house, usually performed by an independent home inspector.
A 4-point inspection looks at four major components – roofing, electrical, plumbing, and HVAC systems to determine the condition of these key aspects of the home and how they may affect a homeowner’s insurance policy. Insurance companies often order a four-point inspection on primary homes 40 years or older and rental property over 30 years old.
A mortgage lender often only requires a termite inspection for active infestations. Mortgage lenders and insurance companies have different standards. Mortgage companies are concerned over the appraised value, while insurance companies are worried about the inherent risk they are assuming.
A standard home inspection is a part of the buyer’s due diligence for the real estate purchase.
A 4-point inspection is not the same as a full inspection. The scope is limited to the four areas listed above, while a complete home inspection is much more comprehensive.
A buyer’s inspection is common in real estate transactions, but the insurance inspection requirement is often not discovered until closer to closing. In addition, the findings of an insurance inspection can’t be negotiated as part of the home purchase.
So, it’s easy to see how a 4-point home inspection could be overlooked.
What’s the Purpose of a 4-Point Inspection
The purpose of the 4-point inspection is to assess potential risks associated with insuring a property and ensure they can be adequately covered in an insurance policy. Insurance underwriters use the home insurance inspection to verify the condition of these 4 areas. If any of these systems are nearing the end of their useful life, your insurance carrier could cancel your policy if you are unwilling to perform updates.
4-point home inspections are the norm in high-risk areas like Florida and the Gulf and East Coast. Before a homeowner can secure their desired home insurance coverage, they may be asked to endure an inspection of the current condition of their home or condominium.
Many insurance companies are wary about providing coverage for homes over 20 years old as it increases their liability.
A ValuePenguin study revealed that most homeowners insurance claims stemmed from wind, nonweather water damage, hail, and weather-related water damage.
Specifically, these four factors comprised 71% of all home insurance filings! On top of this staggering statistic, 61% of the priciest cases were caused by those same four types of damages.
For instance, somebody looking for coverage on a thirty-year-old home could potentially experience electrical or HVAC system problems in the near future. Homeowners with insurance usually want reimbursement for such issues, which would cost insurers more money over time.
Insurance underwriters use this assessment to gain an accurate understanding of exactly what financial risk they are taking when insuring that property.
Before new homeowners fully commit financially to a mortgage, they can use a buyer’s full home inspection to determine the prospective property’s condition. Any significant issues discovered within the home’s four major systems could indicate potential problems down the road that could lead to an insurance claim.
However, there is a debate between home inspectors and real estate agents about the necessity of certain repairs. For instance, many items like old electrical systems are considered “grandfathered” and do not require updates according to real estate laws in most states.
However, insurance companies aren’t bound to honor grandfathered components and may require updates to obtain proper home insurance. They’re just not willing to take the risk or a claim.
Sadly, your insurance agent often writes your policy binder the week before closing. The home buyer often doesn’t realize they need repairs to get insurance until after closing and they’ve taken possession of the property.
What Does a 4-Point Inspection Include?
A four-point insurance inspection looks at four key areas of the home: roofing, electrical wiring, plumbing, and HVAC system.
The inspector will consider the roof’s age and condition, the type of material, and the construction method used. The ventilation systems in the attic may also need to be checked. This helps determine whether or not your insurance policy can adequately cover any potential risks associated with an aging or damaged roof.
Insurance companies frown on 3-tab asphalt shingle roofs older than 15 years and architecture shingle roofs 20 years or older. They aren’t willing to accept the risk of a roof replacement in the event of wind or water damage due to a failing roof.
A roof inspection is the most thorough assessment of all. The layout and design of a home’s roof not only play an integral role in its entire structure and affect elements like energy efficiency and mold buildup. Inspectors investigate minutely to identify potential risks that could put the building or people living inside at risk.
During the roofing inspection process, a few aspects are taken into consideration:
- Age: Roofs have finite life expectancies. After 20 years, it is suggested to replace the roof structure; otherwise, the shingles may become cracked and curled or disappear entirely.
- Overall condition: Neglected and outdated roofs tend to collect pools of water that can cause considerable water damage. During an inspection, watchful eyes will identify any signs of roofing issues that could jeopardize your home’s safety.
- Leakage: Careful inspectors will examine your home for any potential leakage problems. If left unchecked, roof deterioration can result in leaks that may cause expensive damage to the interior of your house.
- Roof configuration: When defending your home against fierce winds and heavy snowfall, the shape of your roof plays a pivotal part. Currently, hip roofs are prominent to provide maximum protection against inclement weather.
The inspector also needs to understand your home’s electrical system, including its age and the materials used for wiring. This helps determine whether any safety hazards are present within the home’s electrical workings that could pose a risk for fire or other damage if left unaddressed.
Inspectors of your electrical system essentially check to ascertain that all is compliant with code regulations. This guarantees that every outlet has been grounded properly and that the system’s size matches the dimensions of your residence.
Most insurance companies have identified Federal Pacific and Zinsco as uninsurable electrical panels due to their high risk for residential fires. Faulty wiring on an insurance blacklist includes knob-and-tube and other types of obsolete wiring.
If an inspector discovers any issues in your electrical system, you may still pass the inspection depending on the severity and risk posed. However, some electrical system elements are no longer insurable, likely resulting in failed inspections.
Electrical problems that can fail an inspection:
- Knob-and-tube wiring
- Branch aluminum wiring
- Fuses/fuse boxes
- Faulty breaker boxes like Federal Pacific and Zinsco
- Unprotected wire connections
- A double-tapped breaker
- Cloth and sheath wiring
Another important area assessed during the insurance inspection is the quality of materials used for pipes, drains, and other items connected to water systems. The inspector needs to ensure there are no issues with these components which might lead to water damage in case of a leak or flood.
To ensure your home’s plumbing system is working properly, a licensed inspector will inspect the material and age of all drain and supply lines for signs of leakage. Furthermore, they’ll evaluate the existing water heater to ensure it distributes hot water effectively throughout your house.
For example, polybutylene pipes are a known defective plumbing product that can fail anytime, causing significant water damage to the home or apartment.
HVAC (heating, ventilation, and air conditioning) is an essential system that manages the climate of your residence. Poorly set up or obsolete HVAC systems can lead to bad air quality and dust buildup, resulting in significant health concerns if not adequately addressed.
During the inspection, the HVAC unit is examined to gauge its pass/fail criteria, determine any potential system issues, and estimate its life expectancy. When inspecting, the inspector will consider the system’s condition and age; typically, if it’s over 20 years old, they may recommend replacing it with an updated model.
Your insurer needs to know if these are new enough (usually 6-10 years old) and in good working order so they can provide suitable coverage if something goes wrong with them later on down the line.
Will a 4-Point Inspection Change My Insurance Rate?
What an inspector finds can definitely affect your insurance premium. If the 4-point inspection reveals any issues with the 4 major components, repairs or upgrades may be necessary before being approved for a policy.
Your insurer will want to ensure they can provide safe coverage in case of property damage due to these 4 areas, so it’s important to address any common issues found.
If you make the necessary repairs or upgrades, your inspection report will gain a “pass” status, and your insurance rate should not be affected. However, you may pay a higher rate if the inspection finds something too old or beyond repairable unless the policyholder makes necessary updates.
How to Pass a 4-Point Inspection
Preparing for a 4-point inspection is the best way to ensure you pass without surprises. After all, no one wants to pay more than they have to on their insurance policy! You can start by determining how old your home’s 4 major systems are and preparing to replace or repair them if necessary.
To be sure your home is in its best condition for a thorough and accurate inspection, you must examine it for any potential health or safety risks that a professional inspector would have to note. Here are some things you should check before the licensed professionals arrive:
Protect your home and its inhabitants by having a qualified roofing contractor inspect your roof coverings. Replace any broken, warped, or missing shingles they find. Plus, repair areas with visible water damage or holes in the material – otherwise, these problems will only worsen over time.
Watch out for any visible or unearthed wiring. Pay special attention to double-tapped breakers, fuse boxes, and aluminum wiring—these are all telltale signs of a fire hazard that must be immediately resolved or swapped out. If you see 2 prong outlets throughout your house, you’re likely due for an electrical update.
Look for any signs of leakage, water-damaged walls, and pipe deterioration. These problems can cause serious harm and will likely prevent you from getting homeowners insurance coverage.
To ensure optimal functioning of the HVAC unit, fireplaces, oil furnaces, and window AC units are strictly prohibited as central heating or air conditioning systems in this home.
How Much Does a 4-Point Inspection Cost?
Four-point inspection costs can range anywhere from $125-$250 depending on where you live and the inspector’s experience. Choosing a certified, experienced professional will ensure you get the most comprehensive report that insurers trust.
If you are buying an older home and need an insurance inspection, contact the professional home inspector you hired for your buyer’s inspection. If it is within 30 days, they will likely complete the insurance company’s 4-point inspection form for a reduced rate, provided a reinspection is not required.
Can You Fail a 4-Point Inspection?
Yes, it is possible to fail the inspection. If the four major components of your home are found to be in disrepair or too old, you may not be able to pass the home insurance inspection without doing some updates. That’s why it’s important to identify any issues and make necessary repairs or upgrades before the day of inspection.
Will My Insurance Company Cancel Me If I Fail the Inspection?
Your insurance provider will not immediately cancel you if you fail the insurance inspection. However, they may require certain repairs or upgrades before providing coverage. They will also likely charge a higher rate. Reviewing your inspection report carefully and addressing any issues to get the best rate is important.
The four-point inspection is important in securing the best insurance rates, so it’s in your best interest to ensure you pass it! If you prepare ahead of time and make any needed repairs or upgrades, then you should be good to go.
- A 4-point inspection is not a comprehensive evaluation of an existing house. It’s only an examination of the roof, electrical, plumbing, and HVAC systems usually performed by an independent home inspector.
- The purpose is to assess potential risks associated with insuring a property and ensure they can be adequately covered in an insurance policy.
- A home insurance provider may shy away from providing coverage for homes over 20 years old as it increases liability. They may cancel a policy if any of these systems are nearing the end of their useful life and the homeowner is unwilling to perform updates.
- A roof inspection is the most thorough assessment of all. During the roofing inspection process, aspects such as age, signs of deterioration, leakage, and roof shaping are considered.
- Electrical problems include aluminum branch wiring, knob-and-tube wiring, fuses/fuse boxes, faulty breaker boxes like Federal Pacific and Zinsco, a double-tapped breaker, and cloth and sheath wiring.
- Plumbing is another important area assessed to ensure there are no issues with components that might lead to water damage in case of a leak.
4-Point Inspection FAQs
How much does a 4-point inspection cost in Florida?
A 4-point inspection in Florida typically costs between $125 and $250.
Is a 4-point inspection required in Florida?
Most insurance companies in Florida only require a 4-point inspection as a condition for insuring primary homes over 40 years old and rental properties over 30 years old. Some companies require these inspections for homes 25 years or older.
Who can perform a 4-point inspection in Florida?
A certified home inspector can perform a 4-point inspection in Florida. The inspector should have experience in inspecting the four major systems of the home, including the roof, electrical, plumbing, and HVAC systems.