Home Inspections & Home Owner's Insurance

Today I had the opportunity to sit and chat with a leading provider of Home Insurance.

Together we are in the development stages of a program which could benefit the Home Buyer, Inspector, and Insurer.

Obviously many ideas exchanged. But the one remembered most went similar to this: (This list is only the basic principal)

  1. The Home Inspection is Contracted.
  2. The Home Inspection is performed.
  3. The Home is bought.
  4. The Home Inspection Report is filed with the Home Owner’s Insurance Policy application.
  5. The Client is guaranteed a three year lock on rates.
  6. Option to have a follow up Inspection every three years with additional beneficial packages to follow.

Like I said this needs considerable work, and obviously I have not outlined all the details.


Why is the report filed with the HOIPA…in case they feel the need to sue the inspector in the future?


I don’t think I like the idea much…

Please give me an example. If it is in your report as a defect or safety issue, why would you be sued?

Part of the reason that I posted this was to get some feedback, and your assistance and comments are more than welcome.

I see a very positive, long range possibility with this. If the insurance carrier can start this program as a voluntary option to provide HOI rate reduction benefits (or in this case a 3 year lock on rates) it could spread to other insurance carriers. Once the carriers see the value of a proper inspection, and follow-ups, it could possibly become a requirement by carriers to insure a home. Carriers are always looking for ways to reduce their liability and this is one very good way to prevent insuring a home that has issues from the beginning and recurring checks to make sure HO’s are maintaining their homes.

I would think that adding a re-inspect between the home inspection and home being purchased would be included to ensure that defects found and as part of the neogiation (between byuer and seller) had been repaired properly by the seller. I would think the insurance company might want this as part of their documents for insurability.

So long as they, the Insurance company, do not try to impose there own pricing on what an inspection is worth.

Having inspected for in surance companies, I can tell you that the carrier is only interested in the cost of replacement. This entails not inspecting, but evaluating and measurement. Like a watered down inspection and construction estimate combined.

I am also a bit suspicious as to why an inspection report would go to the carrier, and for what purpose. Remember, the carrier goes by insurance actuarials, and the applicant’s credit history also goes into the mix. Carriers look at types of liabilities, including dogs (dog bites) , etc.

So, what would the purpose of a non-invasive inspection be? The appraiser, who also is sent to establish a value, helps mitigate risk for the bank. Will the carrier refer back to the inspection report, that they have used as a benchmark, and when a loss is filed, then look at the inspector for indemnification?

I dont even know if they can do this, unless the carrier dictates special terms to the client and inspector.

We need to learn more about this, before coming to any type of conclusion. I’m just a bit leery. Most insurance contracts are pretty one-sided, IMO. Carriers typically do things that are to their benefit only, except in cases where directed to do something by law.


You are probably already aware of the CLUE database that is maintained by underwriters ( http://www.privacyrights.org/fs/fs26-CLUE.htm ). Here in Texas, if a homeowner is denied insurance due to issues found in the CLUE report, they can have an inspection performed and file it with the insurer as proof that there are no reasons to not insure the home. The insurer then would be required to insure the home but it does not affect the underwriters ability to jack up the policy rates.

Texas also has a program called The Voluntary Inspection Program (VIP) run by the Texas Department Of Insurance. TDI also provides a homeowner denied insurance with a list of certified Inspectors that they may use for these and limits the inspection fee that can be charged. These Inspector offerings were originally meant for lower income to allow them to afford the inspection but any Inspector the underwriter agrees to can perform the inspection.