Did you ever have an insurance company inspect your home or property and tell you that you had to fix or change something? Am I required to comply? Will it lower my insurance costs? What gives the insurance company the right to require it?
Let’s start with the basic reality; insurance is nothing more than a legalized gambling operation. The insurance company is the casino, your agent serves as the bookie, and you are the gambler. When an insurance company agrees to insure your property, they are accepting your bet (money) against the odds that you will receive a pay out in the form of a full or partial loss during the given policy period. In setting the odds, insurance policies include stipulations that not only govern under what circumstances they will pay out, but also your obligations if you want the insurance to remain in effect. If you fail to comply with those requirements, the insurance company can terminate your policy or refuse to pay you after a loss.
One such policy stipulation is the right to inspect your insured property. Not all insurance companies inspect insured properties. Some inspect a percentage of the properties they insure annually. Generally, insurance companies inspect every property at the start of the policy period.
When getting an insurance quote the agent or insurance company representative you are dealing with should be asking you a number of questions that might include information about updates to your home’s roof, heating, plumbing, and electrical systems. They will ask about having a pool, trampoline and woodstove. There are dozens of other questions as well. How you answer those questions leads the agent to ask more questions to better understand if your home will be an acceptable risk (or bet) for the insurance company. The pricing that agent comes up with is very much tied to your responses. They are applying discounts available for what you indicate is present.
The presence of smoke detectors will not only help to alert you of a fire, but that early notification usually helps get fire department to the fire sooner (thus reducing the loss). Insurance companies give discounts for these alarm systems.
Things break as they age and technologies change. Fuses and knob & tube wiring were very common as recent as the 1960’s. Both when installed and used properly were great systems. But people like to push the limits of such systems. Adding more appliances to a knob & tube wiring system caused wires to heat up. Attaching a penny to the back of a fuse may prevent the fuse from failing but negating the intent of “blowing a fuse” when a circuit is overloaded. Fires are the common result. Today electrical codes limit the number of appliances on a circuit based on the gage of the wiring and the capacity rating of the circuit breaker used. When you have fuses or knob & tube wiring, not only do you have a very old system but one that is technologically out dated. Insurance companies will not take the bet that your home will not burn during their policy period.
Our area is known for acidic water. Pipes older than 20 years commonly develop leaks. If you have updated your plumbing, there is less chance of leaks. Those leaks would be damage which the insurance company would have to pay for.
New and updated heating systems are more reliable. The technology has changed resulting in more fuel efficiency. Both help you. But for the insurance company, a failing heating system can result in frozen pipes and the water damage that occurs when they begin to thaw.
When you have updated or replaced your roof, plumbing, electrical and heating systems within the last 20 yrs, insurance companies generally give you a discount. But when they give you that discount they want to be sure to verify that the updates were done. That is done through an inspection.
Some inspections are done purely for safety concerns. Trampolines are a lot of fun. They help children develop gymnastic skills. But accidents commonly happen when they are used; particularly when used without supervision. Common are serious injuries including paralysis. My agency represents one insurance company that will write your homeowners insurance if you have a trampoline –but only if it has a perimeter netting. I am not aware of any other insurance companies operating in Rhode Island who will insure you if you have a trampoline.
Another common series of safety concerns arise when you have a pool. While the most common injuries with in ground pools arise from slides and diving boards. When used properly, there are seldom any serious injuries; it is the unintended use that seems to be the issue. All pools offer the potential for drowning, neck or back injuries from shallow water dives, and slips and falls from the wet deck surfaces. But there is another hazard that is prevalent with both above and in ground pools; the security of them. The above ground pools that have a deck area must have a lockable access gate. In ground pools must also have a minimum of a 42” fence and lockable gates for the surrounding pool area. The fence and gates serve to restrict access when you, as the property owner, are not there to supervise. Because of these liability hazards, few insurance companies will insure your home if you have a pool with a slide or diving board and none that I am aware of, will insure you without having a fence.
I think most people want to be safe, but don’t want to be told that you have to do it. I make it a practice to visit all of my prospective insured’s properties, and usually before I provide you with the best proposal I have found for you. When visiting your property, I strive to identify areas that an insurance company’s inspection will likely generate recommendations. Usually if I give you advance warning why a given condition will draw the attention of an inspector and explain how to correct the condition, the blow of the formal recommendation is softened. The reality is the most insurance recommendations reflect an established standard developed by recognized entities such as the National Fire Protection Association (NFPA), National Safety Council, or State & National Building Codes. In some cases your home may have been exempted from complying with the current codes or standards due to building age however the insurance company is not seeking regulatory compliance; they are trying to help you prevent a loss—to protect you and save themselves a claim payment.