What is it?
An insurance inspection providing information on the four mechanical aspects of a home. These four points are the roof, electrical, plumbing and HVAC systems.
What does it do?
The inspection provides the age and operating condition of the inspected items. It also provides the remaining life expectancy. Observable damage is noted as well as specific conditions or materials which may present a risk of damage or injury. Examples include: hazardous electrical panels, double taps on wiring, roof damage, polybutylene piping and overloaded electrical issues. Any systems with a life expectancy of less than five years may be an issue.
Underwriters will not normally insure a property with a poor Four Point Inspection.
Why do Insurance Companies use a Four Point Inspection?
Insurance companies want to be certain they are insuring safe homes which are in good condition. This reduces claims and helps prevent fraud.
How important is this inspection?
VERY IMPORTANT. A poor Four Point Inspection may render a home uninsurable. Most insurance companies will simply decline to insure a home with a unfavorable or poor Four Point Inspection.
How does this impact a Real Estate Transaction?
Buyers, sellers and realtors often learn of a poor Four Point Inspection between the contract and closing date. This presents a sales obstacle which may be difficult to overcome. Poor Four Point Inspections can kill Real Estate deals.
Does a good inspection provide a lower premium?
No, this inspection does not directly impact premium cost. It is a Go or No Go factor in obtaining insurance. Indirectly the inspection impacts premium as it determines the number of insurance companies which will compete to write a policy.
Is a Four Point always needed?
No. As a general rule only homes over 30 years old [or older] require an inspection. To be safe we recommend the inspection on all homes built prior to 1990.
When should the inspection be ordered?
We recommend the inspection be completed prior to listing a home for sale. Sellers should know the issues which may impede a sale. Realtors need to know if a home is saleable and insurable when pricing and marketing a property. Failure to obtain this inspection before executing a contract, or the end of a due diligence period, can result in lost deals and E&O claims.
Who does this inspection and what does it cost?
Most inspection companies complete Four Point Inspections. The cost is typically $100-125. Discounts are often available in conjunction with a Wind Mitigation Inspection.
Some insurance companies [Tower Hill, Federated National] are now providing free Four Point Inspections on homes they insure. This is a cost saving client service. The downside is that deficiencies are not revealed until after the home is purchased. If deficiencies are found after home is purchased the insured has a limited time to make proper repairs to continue coverage.
Is there any good news?
YES! At Boca Expert Realty, we use this knowledge to better serve our sellers and buyers and to negotiate better contracts. Knowledge about this inspection separates us from our competitor.
This article is a service of Burke, Bogart & Brownell, Inc., an independent insurance agency in Boca Raton, Fl. Established in 1973 Burke, Bogart & Brownell, Inc. is committed to increasing Public Awareness and Consumer Education in the areas of Insurance and Risk Management.
Posted by Boca Expert Realty on
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