What You Need to Know: Four-Point Insurance Inspections

Just about everybody knows about home inspections as part of the due diligence prior to closing a transaction. Are you aware of four-point home inspections required by many insurance companies when writing a policy for a single-family home? 

Specifically, most insurance providers for older homes (25 years or older) will require this above and beyond the standard home inspection. The concern is that there may be conditions in an older home that could be liabilities. This four-point assessment will show explicitly what the insurance needs are as well as expose liabilities. 

While there is no industry-wide standard form, some insurance companies have created their own forms and some accept forms used by certified property inspectors. These forms will include the requisite four areas of examination: 

• Electrical
• HVAC (heating, cooling, ventilation)
• Plumbing
• Roof

Insurance companies want to confirm that these four important (and expensive) components in the home are working as intended within the manufacturer specifications. The inspector will evaluate these components based on the current working condition, scheduled maintenance checks, and service life expectancy. Upgrades and updates will decrease the insurance premium and will be noted on the form. 

The insurance companies are looking for these four systems to be in generally good working condition and that they are not at the end of their service life. In the end, this inspection gives both the buyer and the insurer confidence in the home's vital systems.

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