Home Inspection for Home Insurance: Is it Mandatory?

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Picture of By <span>Matthew Roberts</span>
By Matthew Roberts

Updated on March 13, 2024

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Picture of By <span>Matthew Roberts</span>
By Matthew Roberts

Updated March 13, 2024

Visit author page

3 minute read

Article Contents
Do You Need A Home Inspection For Home Insurance?

When protecting your home, one of the most crucial steps is ensuring you have the right home insurance coverage. Sometimes, completing a home inspection might be necessary to secure your homeowner’s insurance. This article delves into the intricacies of home insurance inspections when you might need one, and what to expect, offering insights and guidance to help you navigate this aspect of home ownership.

What Are Home Insurance Inspections?

A home insurance inspection is a thorough assessment of a property’s condition conducted by a professional inspector. These inspections are crucial for insurance companies to evaluate the risks of insuring your home. They typically focus on identifying any issues that could increase the likelihood of future insurance claims, such as structural weaknesses, outdated electrical or plumbing systems, or potential fire hazards, for which you might need additional fire risk coverage. Many houses potentially face these issues, such as the estimated 292,000 homes in North America with outdated Kitec plumbing. In Canada, around 516,884 properties might be affected by the Kitec crisis, although exact figures are unclear.

Do I Need a Home Inspection for Insurance?

While not always mandatory, home inspections are crucial for identifying potential risks and safety issues inside and outside your home. Qualified inspectors, which include reliable organizations like the Canadian Association of Home and Property Inspectors and the Ontario Association of Home Inspectors, can pinpoint current and future problems, helping to evaluate the property’s value and identify necessary updates or repairs. 

To put it simply, you need a home inspection when your insurer requires it, but some common scenarios where you might need a home inspection include:

  • Purchasing a New Home: Insurance companies often request an inspection when buying a new home, especially if it’s an older property. It’s often called a home appraisal. It helps identify any necessary repairs or flaws, informing buyers and sellers about potential work needed and its market value. 
  • Renovations and Upgrades: If you’ve made significant changes to your home, such as major renovations or system upgrades, your insurance company might require a new inspection.
  • Policy Renewal: Some insurers may request periodic inspections as part of the policy renewal process, particularly for older homes.
Reasons why you might need a home inspection

Benefits of Home Inspection for Insurance

  • Risk Assessment: Insurance companies require home inspections to assess the risk of insuring a property. Older homes or those with outdated features like oil heating tanks or alternative wiring may pose higher risks, leading to more stringent inspection requirements.
  • Policy Determination: The findings of a home inspection can influence the terms of your insurance policy, including coverage limits and premiums, and even help you lower your home insurance costs.
  • Safety Assurance: Inspections ensure that your home meets safety standards, which can prevent potential accidents and insurance claims.
  • Confirm Home Value: It’s important to ensure your home is adequately insured, covering its replacement cost, resale value, and potential weather-related damages.

How Much Does a Home Inspection Cost?

Expect to pay around $500 for a home inspection, which typically takes 2 to 4 hours, varying with your property’s size and inspection depth. It’s beneficial to accompany the inspector to observe potential issues directly and ask or answer questions. While the inspector will photograph key areas, bringing your camera for additional reference photos can help you remember more details.

How to Prepare for a Home Insurance Inspection

  • Maintenance Check: Ensure that your home is well-maintained. Address small repairs like mending dripping taps or renewing old insulation, and examine external surfaces for any signs of cracks, mould, decay, or mildew. The Government of Canada has a detailed guide on home maintenance.
  • Documentation: Have all relevant documents ready, including receipts for any major repairs or renovations, as well as records of updates to heating, electrical systems, windows, roofing, and plumbing.
  • Accessibility: Ensure the inspector can reach every part of your house, including the attic, basement, and crawl spaces.
  • Cleaning: Tidy up your house, removing clutter and potential fire hazards.
  • Home Size: Provide proof of your home and property’s square footage.
  • Fireplace Safety: Have a WETT-inspected fireplace for safety.

What Do Insurance Companies Look for in Home Inspections?

The inspector will enter your home and fill out a report if a home inspection is requested. In the report, they will note things like:

  • Structural Integrity: Inspectors assess the condition of the foundation, walls, and roof.
  • Electrical System: They check for outdated wiring, e.g. Knob and Tube wiring, and ensure that the electrical system meets current safety standards.
  • Plumbing: The system is examined for leaks, corrosion, and compliance with current regulations.
  • Heating and Cooling Systems: The condition and efficiency of HVAC systems are evaluated.
  • Potential Hazards: Inspectors look for fire hazards, potential for water damage, and other risks.

After the inspection, expect a comprehensive report outlining findings and recommended timelines for necessary repairs or updates.

The Outcome of Home Inspections

Following an inspection, one of three outcomes is possible:

  • Approval: Your insurance is approved as applied for.
  • Conditional Approval: Approval with specific conditions or recommendations for improvements.
  • Denial: In rare cases, a home may be deemed uninsurable. A home is considered uninsurable if it requires extensive repairs or is unfit for living. Factors like hazardous materials, faulty heating or electrical systems, and other high-risk elements can make a property too risky for insurers.
Home Inspection Process

What Do I Do If My Insurance Is Denied?

If your insurance gets approved, your standard policy remains as initially applied. If it’s approved with conditions, these are usually related to findings from the inspection. In case of denial due to the inspection results, you might need to seek an alternative insurer, preferably one specializing in older or higher-risk properties.

The Bottom Line

Home insurance inspections are vital to the insurance process, helping homeowners and insurance companies understand and mitigate risks. While they may seem daunting, these inspections ensure your home is safe and adequately covered. Knowing what to anticipate and how to get ready allows you to handle the home insurance inspection process confidently.

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