After a
number of years where many home insurance carriers downgraded their involvement
in issuing new home insurance policies in Florida, some companies are returning
to the game with added inspection requirements.
The early part of the century
brought significant storm damage to homeowners in the state of Florida. In
2004, four separate storms hit the state. Then in 2005 Katrina hit, and while
it did not affect Floridian homeowners directly, it did affect insurance
carriers. They began to reassess their risk levels and as a result many
insurance companies began to increase premiums and require more in depth home
inspections prior to issuing a new policy. In Florida, it is now universally
required to obtain a 4 Point Home Inspection on a home that was originally constructed
30 or more years ago.
Insurance carriers use the 4 Point
Home Inspection to assess if there are any pre-existing conditions, or ticking
time bombs, which may result in costly claims. This process is a visual
inspection that covers the four highest risk areas of the home; namely, the
roof, electrical system, heating and air conditioning (HVAC) system, and the
plumbing of the house. It takes the combined efforts of a licensed roofing
contractor, an electrical contractor, an engineer inspector, and a home
inspector to conduct the inspection and generate the inspection report. These
licensed professionals look at the overall condition, the materials used, and
age of these areas. If any issues are found, typically the home inspector
provides the homeowner with a detailed report on what the problems are and they
then have the option to fix the problems and have another inspection done.
The 4 Point Home Inspection was
never intended to be a replacement for the pre-purchase home inspection done
prior to purchasing a new home as it is not as comprehensive. It also is not a
guarantee that the insurance company will issue a policy for the home. It is
the underwriter’s responsibility to determine from the inspection whether or
not there are any reasons to disqualify the home from coverage, or what type of
coverage the home would receive based upon its potential risk of damage.
After the losses from the storms in
2004 and 2005, many insurance carriers began to cut the number of home
insurance policies they issued in high risk states such as Florida. For
instance, prior to 2009, State Farm was the second-largest property insurer in
Florida. When the carrier’s request to hike its rates by more than 47% was
denied by the state’s insurance regulators, State Farm decided to severely cut
back its market share to nearly half of what it was. In the following four
years, State Farm dropped the number of residential property insurance policies
it held in Florida by more than 53% (457,000 homeowner policies), dropping its
share of the market from 13.8% to 6.5%.
With damage from storms lessened
over the past few years and insurance rate increases authorized, many insurance
companies are growingtheir numbers of home insurance policies in Florida. State
Farm is tip-toeing back into the game, issuing new home insurance policies on a
limited basis.
However, State Farm has also
increased the necessity of performing a 4 Point Home Inspection prior to
issuing or renewing residential home insurance policies. It is now asking for a
more detailed report with extra documentation and digital photos to go along
with the 4 Point Home Inspection.It is conceivable that other insurance
carriers will follow in State Farm’s footprints. This will result in increased
demand and importance for the 4 Point Home Inspection.
South Florida Home Inspection
Association has been handling these 4 Point Home Inspections and has been
keeping informed on how insurance carriers are changing these inspections in
southern Florida for years. For more information on what a 4 Point Home
Inspection is (and what it is not) please visit their website at www.sfloridahomeinspection.com/services/insurance-inspection/
or call (561) 818-5593.
For
more information kindly visit south
florida home inspection
