Four Point Home Inspection
Four Point Inspection?
Let’s get right to the point. A four point inspection is focusing only on the most important issues a house may or may not have. It was created after Hurricane Andrew struck Florida, which happened in August 1992. Andrew was the most expensive hurricane in Florida’s history.
The category five storm left scars in the landscape as well as on the balance sheets of the insurers for more than a decade. With so many homes damaged, insurance companies needed a quick solution for the future. They needed a method to figure out which homes are risky deals to insure and which ones are not. Insurers knew that this was most likely not a single event.
Cracked or ugly tiles are no risk, right? But some structural elements certainly are. As an insurer, you need to keep an eye on the structure. Don’t sweat the small stuff. Thus, Four Point Inspections are now performed on behalf of many insurance companies on real estate.
But what exactly is a “Four Point Inspection?”
Well, this type of inspection was easy to perform and, therefore, became an essential requirement for the insurers. Whenever they are now offering insurance to new homeowners, a “Four Point” is needed.
By the way, State run Citizens insurance introduced this type of inspection. It quickly became a success story. By now the “Four Point” has spread to most, if not all of the insurance companies that provide coverage in Florida.
Why did the Four Point Inspection become so successful? This type of Inspection consists only of a visual survey of the following four primary components:
- Electrical System
- HVAC (Heat, Ventilation & Air Conditioning)
Insurance companies are looking for those four systems to be in generally good working condition. They need to fulfill their intended function because they represent the vital signs of a home. Cosmetic issues are of no concern to insurance companies. If the home is an older home, the insurance companies want to see that those systems are up to date.
Older Homes are under the Gun
Insurers have become increasingly reluctant to issue Homeowner Insurance Policies on older homes. 20+-year-old homes are already considered “older.” Their common concern is that there may be conditions in an older home that could soon become a liability to them. It is well known that insurers tend to avoid liabilities and risks like the plague. They want to make money – not to spend money.
Therefore, some older electrical panels are not insurable. Or only when the homeowner is willing to pay a steep premium. If the roof has an issue, insurers may not underwrite a policy at all.
A non-functioning A/C system may result in mold damage. Faulty plumbing may cause a costly water damage soon. So? What can you expect? Either a “Nay” when applying for a homeowners insurance or at least a “not so favorable” premium.
Newer homes are assumed to not have these problems as frequently as older homes. Although, many older homes appear to be in better shape than more modern homes. But that is a different story.
Two completely Different Types of Home Inspection
But keep in mind: You, the buyer, want to know how deep you have to dig into your pockets after the closing. All those leaking faucets and broken tiles, which only a knowledgeable home inspector finds during his pre-purchase comprehensive inspection, can amount to a nice sum of money. You may want to re-negotiate the price. You may have the seller do all or some of the repairs, or even want to bail out if the repairs are too overwhelming.
Summary: The Four Point Inspection is primarily of interest to the insurer. The buyer should not waive the comprehensive home inspection at all. The 300 -500 bucks spent for a good inspector are well spent and worth it. Will the insurance companies take your (even broader) report that you paid for already? Don’t kill the messenger, but I have bad news for you.
No, they will not accept the report. Insurance companies don’t want to dig through 15 pages of paperwork. They are not interested in bad tiles and wobbling toilet seats. Even the beautiful picture of the dripping faucet doesn’t impress them too much. They will most likely insist on their “Four Point” thing. Short and sweet. You pay the extra $80 anyway. What if not? Well, that house may become your „dream“ home forever. Sweet dreams.
Categories: Insider Tips for Buying a home