Saturday, December 4, 2010

Every Home, Every Year

When you take out a new insurance policy on a home or rental property, the insurance company sends out an inspector who prepares a report about the property, takes pictures of the exterior and may even talk to you or whomever is home at the time. This information is then sent back to the insurance company and based on that report they decide if your property meets their requirements or if they should have you find another carrier. This inspection is usually done within the first 60 days of your new policy coming into effect. They also inspect again when you go to renew each year.

Since this inspection is only of the exterior, they are not going to come inside. If you are home, they may talk to you and ask you some questions. I have had an inspector interview a clients teenage son who told them about the pitbull puppy in the back yard. While their policy was not canceled (they removed animal liability coverage and later got rid of the dog), it did require a letter from them at renewal time stating that the dog was gone.

Insurance carriers do property inspections for a few reasons.

First, to make sure that the questions you answered during the application process are answered correctly and that the property meets their underwriting criteria.

Second, to make sure there are no hazards that may cause harm to you, your family, guests or to the structure. This could result in a claim from a condition on the property that could be easily fixed now for a few bucks at Home Depot.

Third, it's their check book. If you do have a claim, you have paid your yearly premium and your deductible. The carrier gets stuck with the lions share of the cost. If something shows on an inspection report that the carrier is concerned about, some carriers will give you time, normally 30 days, to correct the issue and respond back to them that it is corrected. Don't wait until the last moment to do this. Get it taken care of asap. If you wait until the last moment you could be canceled even though you have taken care of the issue. Call your agent and talk to them if you are not sure how to get information to the carrier.

I know inspections can be frustrating if something needs to be corrected and you just moved in. They are for us agents who have to explain to clients whats going on. We have no control over what the inspector or underwriting will do. You and your agent have to work within the rules set for us by the insurance carriers. That is not to say you don't have options. Insurance carriers are like people around a salad bar. Some want iceberg lettuce, some want corn on their salad, others don't. They may take a radish, or some ham. Or not.

There is someone out there that will take the property. The question is how much you want to pay. A few dollars now at home depot or a few hundred more a year?

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