Everyone has their impressions about how their Canadian home insurance company conducts their business. They assume that once the Insurance company has inspected their home and qualified it for insurance coverage that’s the end of the house checking. They assume they will not have any real contact with their Insurance company other than for paying the premiums unless there is a need to file a claim. This is not usually the case. Home insurance companies will have a few different circumstances where they will require your home to be checked.
The Initial Inspection
In many cases when a homeowner applies for home insurance there are a lot of questions asked by the insurance company. Based on the answers to these questions they will find a reason to justify a home inspection before final approval is given for the insurance and before the cost of premiums is determined. It isn’t a rule that a home inspection will be required but it certainly is a possibility.
What Could Trigger a Home Inspection?
- An older home
- Aluminum wiring
- Less than a 100 amp electrical service
- Knob and tube wiring
- Oil Tanks
- Wood Stoves
Most of these apply to the older homes. So just the fact that your home is older will likely trigger a home insurance inspection. Which during this process all of these other concerns on the list will be looked for.
What Can Be the Outcome of the Home Inspection?
The outcome can vary, and the results may be;
It Passes the Inspection
- Even though the home is an older one, prior upgrades have addressed the risks that the Insurance company is concerned about.
It Passes the Inspection with Conditions
- The home overall may be up to the insurance standards, but there are some issues that need to be addressed. For example, they may require that the oil tank be replaced because it is older than ten years.
The Insurance is Denied
- The insurance company may opt not to provide insurance because there are too many high risks present and the homeowner would have to correct all of these before being accepted.
Trying to Avoid the Home Inspection
It is not uncommon for a lot of people to feel that a home inspection like this is an intrusion on their privacy. So they may decide they will not agree to the home inspection. The outcome in this situation could be;
- The insurance company will deny the insurance coverage.
- The policy will contain a lot of exclusions so coverage will be very limited.
Follow Up Home Checking
Your insurance will have its mandate as to how often it will do a home inspection.
What is the Purpose of the follow-up home Inspection?
- They will want to determine if there are any new risks to them that have not been reported. There could be ones that you are not aware of.
- Often they are looking to see if there are any unreported upgrades that could increase the cost to replace the home.
- Another purpose may be to determine if you have enough insurance coverage or the right type.
How is a Standard Home Inspection Carried Out?
Each insurance company will have its methods for doing this. Quite often they will contract out home inspections to another company that has expertise in this area. The home inspector will have the following concerns on his agenda.
- Are there any concerns for fire hazards?
- Is the property considered to be safe?
- Heat is checked
- Plumbing is reviewed
- The electrical system is checked
- An up to date replacement value is calculated.
What Could the Home Inspection Cost You?
The home insurance inspection won’t cost you anything for the actual inspection. But, where it could cost you is in an increase in premiums. Some additional factors that may arise as the result of the inspection are;
A finished basement can increase premiums by 20%
- Why? It will cost more in claims to repair and replace.
A swimming pool can increase premiums by 6%
- Why? It increases the cost of property replacement. It also creates an additional liability risk.
Shingled roofs or wood shaking can increase the cost of insurance by 10%
- Why? This type of roofing is more susceptible to wind and hail damage.
Should You Try and Avoid the Home Insurance Inspection?
It is becoming more common for Insurance companies to at least do the initial home inspection. Based on this some people are avoiding getting new home insurance quotes just because they want to avoid this.
In an article written by the Globe and Mail it goes into detail as to how home insurance inspections are becoming more common, and how some will try to avoid this, stating, “It used to be that you could try to avoid higher home insurance premiums by shopping around for cheaper coverage. Today, though, switching to a new company raises the risk of a home inspection that results in higher costs to you. Yes, home insurers are really hitting us where we live.” Source…Globe and Mail
Is This a Wise Decision?
The whole purpose of home insurance is for the homeowner’s protection. It covers the cost of mishaps that could financially devastate them. The insurance companies are all about mitigating risks. But, what gets forgotten here is that those risks are ones that are the most detrimental to the homeowner as well.
So it makes more sense to know what these risks are for the safety and financial stability of the home occupants. These risks are valid, and there is a good reason the insurance companies identify them. Looking at it in this fashion means looking at the Home inspection in a positive manner.
It is true it could put the insurance premiums up. But, a much more effective and safer approach would be to look for ways such as home insurance discounts that could offset the increase in premiums.
Other Forms of House Checking
The homeowner has responsibility for arranging for house checking in another manner. This applies to those who are going to be leaving their home vacant for more than a few days. Often, it is written into the policies that the house must be checked on a regular basis during the absence of the homeowner.