Buying a home is more than just finding a property that ticks the boxes, making an offer then renting it out. If you’ve been in the real estate game for a while, you understand that the property-buying process involves a few stages with paperwork, reports, and inspection.
After buying a home, you’re most likely going to get home insurance for protection against theft and natural tragedies, such as fires. Homeowners’ insurance coverage is influenced by a four-point home inspection.
Insurance companies will use the report to decide whether they’re going to cover your home. This inspection generally informs them how much liability they’ll be taking by covering you.
In this guide, we’ll look at what a four-point home inspection is, what it covers and how to prepare for one.
Related: How Long Does a Home Inspection Take? A Guide for Investors
What Is a 4 Point Inspection?
Primarily, a four-point home inspection is an analysis of the general condition of your property. It’s called 4-point because it covers the following areas:
- Roofing
- Plumbing
- Electrical
- HVAC
Homeowners’ insurance companies usually request for this inspection to tell if a homeowner qualifies for coverage or if one is renewing their policy. It’s also a chance for the insurer to get a report from a neutral party about the property’s condition.
In recent years, many insurance companies have been hesitant to offer coverage for houses that are over 20 years old because they tend to have more liability.
For example, a 25-year old home most likely has electrical or plumbing issues that could come up in the near future. Since homeowners will seek compensation from the insurance company, it ends up being costlier on their end.
After a 4 point home inspection, an insurer can estimate how much they should expect to spend on home repairs and maintenance. Remember, in their eyes, it’s a financial risk.
Besides the insurer, homeowners can also use the 4 point home inspection to tell whether the house will be worth the investment before securing financing. The obvious issues noted could mushroom into bigger issues in the future.
What are the benefits of a 4 point home inspection?
4 point home inspections offer several benefits even if you’re in a state that doesn’t necessarily require you to get one done. They include:
- Fast, easy, and cost-friendly- Four-point inspections simply require you to call a professional home inspector and get it done in a short time. They are also known for being inexpensive.
- Steer clear of future issues- As we’ve seen, a 4 point home inspection will help you take note of any issues and avoid bigger issues in the future.
- Know the condition of your home- A 4 point home inspection is not only beneficial for homebuyers and insurance companies. If you’re thinking of selling your home, the inspection will help you know what needs to be fixed before you can find a buyer.
What Does a 4 Point Inspection Cover?
When you hire a professional house inspector to carry out a four-point home inspection, they’ll check the following components:
HVAC System
HVAC is an abbreviation for heating, ventilation, and air conditioning. It’s one of the most important systems in your home as it helps regulate climate control. If your HVAC is outdated and not well-maintained, it accumulates a lot of dust which leads to problems with air circulation and quality. If left unchecked, it poses a risk of health hazards.
What does a professional home inspector look at when inspecting an HVAC unit?
- Age and condition- Although it’s not a primary determining factor, a qualified inspector will look at how old your HVAC is and its condition. These factors will help you know the expectancy of the system and also see how well-maintained it is.
- Functionality- If the HVAC system is to pass the inspection, it needs to be suitably sized, and by performing the cooling and heating functions well. Window AC units, fireplaces, and oil furnaces don’t qualify as home heating and cooling units because of safety concerns.
If your HVAC system has no obvious issues, you’ll be good to go. Also, if the system is over 20 years old, it’s recommended that you do an overhaul and replace it with an up-to-date system.
Plumbing System
The licensed home inspector will check your home’s plumbing system to ascertain that there are no leakages. The plumbing system’s age and material used are also important as you can use it to tell its expectancy.
The inspector will also check all water supply lines through the house to ensure water is circulating well. The hot water heater is another important aspect that will be checked.
Related: A Landlord’s Role in Plumbing Maintenance
Electrical System
For your electrical system to pass the home inspection, it needs to meet code regulations. For one, the electrical system needs to fit the size of your house and be well-grounded.
Your home could still pass the inspection if the inspector notices some minor issues. It all depends on how severe the issue is and the potential risk it poses.
On the other hand, however, other issues will lead to home inspection failure as they are uninsurable. They are:
- Fuse boxes and fuses
- Aluminum branch wiring
- Sheath and cloth wiring
- Knob and tube wiring
- Double-tapped breaker
Related: Electrical Inspection When Buying a House
Roofing
Roofing inspection is known for how in-depth and comprehensive it is. While your roof’s design is fundamental to the house structure, it also affects your home’s energy efficiency and influences whether mold accumulates in your house.
As such, bad roofing could pose health hazards and other safety risks that could lead to inspection failure.
What does the inspector check during roofing inspection:
- Age- Like other house components, roofing should be replaced every 20 years. Aged roofs will show cracks, curls, and missing roof shingles.
- Leakage- A leaking roof is a sign of deterioration. Leaking will cause even more costly issues in your home.
- Shape- Unknown to many, roof shaping affects the house’s ability to persevere in harsh weather conditions. For example, if you live in an area with high winds, hip roofs would be the best shape.
- Other signs of deterioration- A poorly done or older roof will have water damage because of pools of water on the surface. Inspectors will be on the lookout for such signs that could lead to health and safety hazards.
Is a 4 Point Inspection Same As a Home Inspection?
A four point inspection is not synonymous with a full home inspection. Insurance companies use a four-point inspection report when putting together a policy for your home, but do not require a full home inspection.
With a four-point inspection, the focus is only on the HVAC, plumbing, electrical, and roofing systems. A full home inspection covers everything in a four point inspection, plus the following:
- House structural integrity
- Appliances
- Doors and windows
- Outlets
- Insulation
- Drainage
While an insurer doesn’t require a comprehensive home inspection, it’s important that you do it before purchasing a home. A full home inspection helps you know the home’s value and condition.
Also, not all homes will require a four-point inspection. You’re most likely going to need it when purchasing an older home, mostly 20 years and older.
Home inspection requirements depend on the state you’re located in. For instance, inspection requirements for Florida may not be the same as in another state. In Florida, you have to get a four-point inspection regardless of the home’s age. Some insurance companies may also require one regardless of the state you’re in.
Full home inspections are not a requirement but are seen as due diligence. Carrying out a full inspection before buying a home will help you see whether the purchase is worth it.
How Can You Prepare For a 4 Point Inspection?
When you hire a professional home inspector for a 4 point inspection, they check the four systems we’ve described above. You should prepare your home beforehand by checking for any obvious issues before the home inspector can note them.
Here’s how you can prepare for a four-point inspection:
- Check whether your HVAC is functioning well. It’s not allowed to use window AC units, oil furnaces, or fireplaces as central air conditioning and heating for your home.
- Watch out for any leakages, pipe deterioration, and water damage. Plumbing issues can cause extensive issues which can easily disqualify you from receiving an insurance policy.
- Ungrounded and exposed wiring are fire hazards. If you notice any of them, get them fixed or replaced.
- Hire a roofing expert to come and take a look at the condition of your roof. Replace any missing roofing shingles, or fix them if they’re distorted. Resolve any obvious signs of water damage and holes.
What Do You Do If You Fail a Four Point Inspection?
Four-point inspections don’t have a grading scale. You either “Pass” or “Fail”. When a home fails a four point inspection, it’s mostly because the roof is damaged, non-existent or non-functional HVAC system, bad electrical wiring, or damaged plumbing system.
Insurance companies have different approaches to when a home fails a four-point inspection. Some won’t insure such a home at all costs, while others offer different options that may be favorable for you.
As a buyer, if the home you’re interested in fails the four point inspection, you can do either of the following options:
- Talk to the seller and ask them to make the necessary repairs
- Look for an insurer that won’t ask for a four-point inspection report. If you go with this option, check well to ensure you won’t be making the repairs from your own pocket.
- Negotiate with the insurance company. Some insurers can actually accept a failed inspection or give you 30 to 60 days to fix the issues.
Before going for any option, ask a building contractor to give you an estimate of the repairs needed. This can be extremely helpful when negotiating with the seller or insurance company.
If the insurance company doesn’t require a four point inspection, they may offer temporary coverage and you can fix the issues at a later date.
How Much Does a Four Point Inspection Cost?
The price of doing a four-point inspection varies depending on the state and insurance company. However, you can estimate it to cost $50 for a low-end home and up to $150 for a high-end house.
If you want to save some cash, you can ask your insurer to recommend an affordable inspector. They usually have a roll of inexpensive home inspectors you can use in your state.
Also, if you’re buying an older home, you can negotiate with the inspector. Some inspectors can offer a free four-point inspection when carrying out a full home inspection.
How Long is a 4 Point Inspection Good For?
Typically, a four point inspection report is valid for a year. However, this is not always the case. Some insurers may continue using the same report for a few years unless legal requirements in your area put a cap on the number of years an inspection report can be used, or you make major changes in your home.
When switching insurers, some companies may allow you to use a four-point inspection report from another insurer as long as it’s less than three years old. Always ask your insurer how often you’ll need to carry out a 4 point inspection.
Key Takeaways
A four point inspection report is necessary for insurers to know the amount of liability your home poses. Getting one is necessary whether you’re trying to get coverage for a new home you just bought or renewing a policy for your existing home.
The four point inspection covers the HVAC, electrical, roofing, and plumbing systems. If your home passes, you can proceed to purchase and get insurance coverage or renew the policy. On the other hand, if it fails, you can negotiate with the seller and insurer to get other options that are favorable for all parties.
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