Failed Homeowners Insurance Inspection? Now What?

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Failed Homeowners Insurance Inspection? Now What?

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Homeowners insurance is a necessity for anyone who owns or is purchasing a home. Many events, both natural and manmade, can cause extensive damage to your house and require expensive repairs. In some instances, your home can be completely destroyed. Without an adequate homeowners insurance policy, most people will be unable to rebuild. That's why mortgage companies generally require these policies.

Before a company will insure you, however, they will probably demand a home inspection in order to evaluate the safety of the building. They sometimes make exceptions for new construction and in other instances, but you will probably have to meet this requirement. Companies will often order an inspection for older homes or homes in high-risk areas as well, even for their current policyholders. Obviously, you need to meet the homeowners insurance company's expectations. If your home fails the inspection, all may not be lost, but you will have to take steps to correct problem areas. Otherwise, the company will not issue a policy or may cancel your current policy. Inspections are that important.

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What to Expect

Your homeowners insurance company will send an inspector to your home to conduct an exterior and, sometimes, an interior inspection. They may hire a third party from your area to complete this job. These inspections usually take place within 30-90 days after you make your insurance application, depending on where you live. Within this period, home insurance companies are able to cancel or adjust your coverage if they find something wrong that wasn't thoroughly covered on your application.

Exterior Inspection

An exterior inspection is simple and takes a few minutes. Someone will come to your home and take outdoor photos of your property. You will not have to be present in these cases. The photos are used to make sure your application is correct about the basics and that the siding and roofing are in good shape. Often, home insurance companies require only an exterior inspection for new or newer buildings and do not demand to inspect the interior.

Interior Inspections

If your property is older or the homeowners insurance company has concerns about your application, they may want both an exterior and interior inspection. The interior inspection may take an hour or two since the inspector will be looking at a number of items, including:

  • HVAC system

  • Plumbing

  • Flooring

  • Basement

  • Interior Foundation

  • Chimney Condition

  • Electrical System

In fact, the interior inspection will include most aspects of your home that can fail due to age or wear and tear. For instance, older plumbing systems can fail and cause interior water damage. Outdated electrical systems often cause fires. Cracks in the basement may mean flooding or serious foundation issues.

The inspection allows the insurer to determine if your home is a reasonable risk or whether it is likely to have a major issue, one that means a costly claim for them to pay out. The inspection may also show that you need more coverage than you originally applied for or that you need additional policies such as an earthquake or flood policy. You should not be surprised if the company makes some alterations to your original application.

If You Fail Your Inspection

Failing an inspection can be inconvenient and sometimes expensive, but it doesn't mean you have to go without coverage. If the inspector fails your property, the company may go ahead and insure you provided you make needed repairs within a short period of time - often 30 days. You'll have to prove to the company that you have completed the repairs, often by sending receipts for the work and materials as well as photos showing the completed work. Sometimes the company will send the inspector out once more to check your home.

The company may simply refuse to cover your home, which means you'll have to find another company to accept you. You'll generally have some time to find a replacement before you lose coverage. But be aware - you should go ahead and make the suggested repairs since other companies will probably refuse you as well if you do not.

Finally, some companies will go ahead and insure your home but let you know the policy won't be renewed at the end of 12 months if you don't make the suggested repairs.

You can certainly discuss the inspection with the insurance company if you don't agree with the findings. They may be willing to compromise, particularly if you are a long-standing customer. In general, though, they will insist that you promptly take care of their concerns.

How to Prepare for an Inspection

You'll be in a much stronger position if you prepare for a home insurance inspection. You can take some simple steps to help speed the process and make it more likely that your home will pass. Here are some helpful tips from the experts:

Do a Liability Check

Search your home for potential dangers that could harm visitors to your home. Broken pavement, a poorly fenced-in swimming pool, exposed electrical wire are all concerns. At the very least, take care of the obvious dangers before the inspector arrives. And remember, inspectors can make surprise inspections on occasion. It pays to always be ready.

Check the Electrical System

A prime trouble spot is your electrical system. Insurance inspectors are trained to spot these dangers and will demand that these issues be fixed. Make certain your electrical system is up to snuff, for your own safety as well as for the inspection.

Check the Pipes

You may have been postponing some plumbing work because you don't want to spend the money on repairs. If possible, get any necessary work done. Leaky pipes won't cut it during an inspection.

Read more about the main sources of water damage in your home.

Check Smoke and Carbon Monoxide Detectors

Make certain that these detectors are in place and have fresh batteries. Your insurer will usually demand that you have a certain number of them, and you don't want the inspector to spot a missing unit or one without a battery.

Keep a Maintenance and Remodel Log

You should log every repair and upgrade that you make to your home. That way, you can show the insurer that you take maintenance seriously, and you may even prove your home is in better shape than it was when your policy was first issued.

Inspect the Foundation

Insurers will always be concerned about your home's foundation. Before an inspection, take a close look at yours, inside and out. Sinkholes under the gutters and downspouts can lead to real foundation damage, and cracks in the basement walls are a serious issue. If you spot trouble, consider having a professional in to access the damage. And be sure to fix the outside drainage issues. Sometimes new gutters and properly positioned downspouts can make a huge difference.

Case the Joint

Experts suggest that you play the role of a burglar in your own home. Look for ways that a thief could break into your home and then fix those weaknesses. Also, see if your valuables are safely locked away. If you have expensive jewelry lying on the dresser top, the inspector will not be impressed by your anti-theft measures.

Final Thoughts

In general, you should try and follow the inspector's repair suggestions and stay with your original insurance company. If you try to find another insurer, chances are they will insist on the same changes. You might be able to find a replacement, but your time to do so will be limited. If you cannot afford to make the necessary repairs, you should consult your lender. You may be able to get a home improvement loan to cover the repairs. After all, your lender wants you to have the right homeowners insurance coverage so that their investment is protected.

If you are searching for a new homeowners insurance policy, you can easily compare your options by using PolicyScout. You only have to enter some basic information to receive quotes from multiple insurance companies, allowing you to easily compare premiums and coverage. If you have to change companies, PolicyScout will find your best options.

Insurance companies are in the business of making money by offering your health, auto and homeowners protection. They will not insure you if they deem you are too big of a risk. To avoid canceled homeowners insurance or policy rejections, keep your home as inspection ready as possible. Homeowners insurance is not something you can afford to do without.

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