What is a 4 Point Home Inspection?
Most buyers are familiar with a typical home inspection where the buyer hires an inspector to inspect a home they are purchasing to see what defects or required repairs the home may have, as well as informative maintenance type issues. However, you may be curious about a 4 point home inspection.
You may have heard the term 4 point inspection thrown around as well. A 4 point inspection is a separate inspection report many insurance companies require on homes 20 years old or more. Citizens required them on homes 30 years old or more. Some companies are requiring them on newer homes as well, so it’s always good to check with your insurance company as getting a 4 point inspection is less expensive if added on to a regular home inspection.
The 4 points are heating and air conditioning, electrical wiring and panels, plumbing connections and fixtures, and the roof.
Insurance companies have become increasingly reluctant to issue Homeowner Insurance Policies on older homes (usually 25 years old or more). Their common concern is that there may be conditions in an older home that could become a liability to them. For instance; a home with a roof nearing the end of its reliable service life may fail while under the policy and the homeowner may seek reimbursement from their insurance company for damages to the home or its contents.
Similar concerns extend to the condition of the HVAC, electrical and plumbing systems in an older home. If these elements are in poor condition, in need of being updated or replaced or were improperly installed, they may fail and cause fire or water damage to a home.
Newer homes are assumed (by the insurance companies) to not have these problems as frequently as older homes. There is a standard form for this type of inspection that must be filled out by a qualified inspector or contractor.
There is also a Uniform Wind Mitigation Verification Inspection which provides significant discounts to a homeowner if the home qualifies. The state has recently changed the reporting rules this year making it harder to qualify for such discounts. More proof is needed in the report including photos.
There is also a Roof Certification Inspection insurance companies require when the roof is approximately 15 years old. The 4 point inspection report may suffice if your insurance company asks for this inspection. Check with your company.
Last week an insurance company sent over their own person to check on one of our listings for an upcoming closing. I checked with an insurance agent who said more and more insurance companies are starting to send their own people over to perform these inspections as they are not fully trusting the reports they are receiving. This may cost the insurance company more money upfront, but it is a signal that they are increasingly looking to limit exposure and risk.
Not only must a seller satisfy the buyer, the lender, the appraiser, but now also the insurance company before a home can be sold.
If the home has polybutylene plumbing you can forget about an insurance company insuring the home. The home must be re-plumbed.
Buying and selling a home today has become more complex. With new Dodd Frank regulations being written and taking effect combined with new insurance disclosures and requirements it’s a wonder anything gets done. Inspectors have to fill out more reports so they must charge more.
As regulations increase Realtors will have to charge more in the future. State Farm now requires their own forms be filled out by inspector on a PC, not a mobile device so inspectors are charging more for State Farm inspections.
Yesterday I had to go back out to a property under contract and photograph certain things for an appraiser to go in that report. Appraisers and insurance companies are documenting everything.
We’d strongly recommend getting a 4 point inspection as an add-on to your regular home inspection. It just might save you thousands on your home insurance, and it might come in handy when you go to sell the property, even if your insurance company doesn’t use it.
Good luck and Happy House Hunting!
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