Home insurance companies use risk analysis to calculate insurance rates. A home inspection is part of the risk analysis. A home inspection benefits both homeowners and insurance companies. Below are some of the benefits and factors that determine whether or not you need an inspection.
The Benefits of Home Insurance Inspection
Home insurance companies usually require inspections before selling coverage to homeowners. Below are some of the benefits of these inspections.
Identify Potential Risks
An inspection helps homeowners and insurance companies identify damage and security risks. For example, the inspection may help you identify security gaps that might allow burglars onto your property. That way, you can take measures to preempt the risks.
Spot Discount Eligibility
Home insurance companies regularly give discounts to low-risk homes. An inspection may help you prove eligibility for the discounts. For example, an inspection may identify fire-retardant measures and materials and qualify you for a discount.
Confirm Property Value
Your home's reconstruction value is a significant determinant of your home insurance premiums. An inspection will evaluate different things that affect your home's value, such as the roof and major appliances. That way, your carrier will base your premiums on the correct home's value.
Factors That Determine Whether You Need an Inspection
A home inspection is not always necessary before buying home insurance. Below are factors that determine whether or not you need an inspection.
The government does not require home insurance inspections. Insurance companies decide whether to conduct inspections or not. If you request quotes from different companies, some require inspections while others do not.
Buildings suffer wear and tear with age. Normal wear and tear increase the risk of damage in disasters. For example, storm damage is more likely on an aging roof than a new roof. Old properties are also more likely to have dangerous installations, such as dangerous electrical systems, than new properties. Thus, insurance companies may require inspections for aging homes.
Some insurance companies don't require a fresh inspection if you have a recent inspection report. Say you inspected the home recently when purchasing it. The insurance company may use the purchase inspection report.
An inspection determines potential security and safety hazards, while an appraisal determines a property's value. However, some insurance carriers accept appraisal reports instead of inspection reports, even though the two differ. Again, you are in luck if you have a recent appraisal and your potential carrier accepts appraisal reports in place of inspections.
For more information, contact a local homeowners insurance service.
Purchasing insurance — the right insurance — is one of the smartest things you will ever do. While there are definitely differences between homeowners, car, life, and health insurance policies, they all serve the same purpose when it comes down to it. Insurance protects you against financial ruin should a tragedy happen in your life. In the case of homeowners insurance, that tragedy could be a fire or a flood. In the case of life insurance, that tragedy would be your death. The more you learn about insurance, the better the decisions you'll make when purchasing it. So dive into the articles here, and start reading.