4 Point Home Inspections Become More Important as Insurance Carriers Tip-Toe Back into Florida

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.
HOBE SOUND, Fla. - Aug. 5, 2014 - PRLog -- 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 growing their 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.

Sydney Smidt
South Florida Home Inspection Association PRs
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