How a Home Inspection Can Affect Your Rates

A home insurance inspection can increase your rates if additional risks and liabilities are discovered. Anything not considered in the initial policy can cause a fluctuation in the rate. This includes potential hazards and risks such as outdated electrical systems, plumbing issues, or a roof in repair. All of these are considered risks that have a high likelihood of increasing the premium you pay.

In some cases, your rates can also decrease. For example, if the inspection discovers potential risks and you fix them before renewing your policy, the updated rate will take that into account. If your home is in good maintenance, then it’s also possible that the inspection will reveal the better quality of your property’s characteristics, reducing the premium you pay. Let’s say you overhauled your security system or put new safeguards from damage in place. The inspection will reveal these changes and your premium will actually go down.

It’s a good practice to undergo an inspection not just in the context of how it will affect your rate, but also to find out potential hazards, as these tests are quite thorough.

In case an inspection ends up revealing any issues, the insurance company can also require you to make repairs or certain upgrades before issuing or renewing a policy. When you compare the added value of a home inspection against the cost, it will turn out to be a good decision under most circumstances.

On average, the cost of a home inspection is $300-350. It depends on a lot of factors such as the size and age of the home, but the inspection will cost roughly around that for the majority of homeowners.

The home inspectors may also check for risks like bodily injury, property damage, and professional negligence – further increasing the cost of the inspection and your rate. 

Key Factors That Influence Rates

Some key factors influence the rate you pay after a home inspection. Though a large part of the inspection process and the rate fluctuation depends on a variety of factors unique to your home, there are some common aspects to consider across households.

  • Property Condition: This is the most important consideration and the most likely to affect your insurance rates. Property condition is the overall condition of your entire home. During the inspection, insurance inspectors will evaluate things such as the age of the roof, the current condition of the plumbing as well as the electrical systems, and the quality of the construction materials. The general maintenance of the property also plays a pivotal role here. Needless to say, homes in good condition are generally seen as lower risk, and those in poor condition may result in higher premiums.
  • Safety Features: Safety features always impact your rates positively. The more you have, the better. These features include smoke detectors, fire extinguishers, burglar alarms, deadbolt locks, and security systems. Of course, the weightage for different aspects differs from insurance provider to provider. You can reduce the risk of damage or loss using these security features, and incidentally, make your home less of a liability for the insurance company.
  • Location and Environmental Factors: Another thing that you should never ignore is the location of your home and the environmental factors surrounding it. These can both affect your insurance rates in a big way. Put simply, if your home is in an area that is naturally more prone to disasters such as floods, earthquakes, or wildfires, your rates can get higher. Proximity to a fire station or fire hydrant can improve your rate on the other hand.
  • Previous Claims History: Not many homeowners pay attention to their previous claims history, but it plays a crucial role nonetheless. The insurance company might choose to review your claims history to assess the likelihood of future claims. If they spot a history of frequent or significant claims, then you are looking at potentially higher premiums. On the other hand, a cleaner claims history often results in a lower rate for your home.
  • Upgrades and Renovations: Certain home improvements effectively reduce the risk of damage or loss. This can positively impact your insurance rates. For example, installing a new roof, updating your plumbing or electrical systems, or making the home more resilient to natural disasters almost always results in lower premiums.
  • Liability Hazards: Lastly, inspectors can also look for liability hazards present on the property. These can include unsafe structures, tripping hazards, or features that can lead to injuries in other ways. You can try to mitigate these hazards and lower your insurance rates.

Being proactive in maintaining as well as improving your home to reduce the risk of damage and loss is the most effective and reliable way to also reduce insurance premiums. If you’re considering an inspection, then it might be a good idea to make some necessary changes, repairs, or upgrades before it so you can improve the overall safety and resilience of your property. This, in turn, will likely lower your insurance rates or get you a better policy.

Overview

Ultimately, it depends on a variety of factors. A lot of features impact the premium you pay. As such, it’s helpful to be proactive in ensuring the safety and resilience of your home before any insurance inspection. Also, you’d do well to keep in mind that the specifics can vary between insurance companies and regions. It’s advisable to communicate openly with your insurance company about the improvements or changes that you’re making to your home.

If you have a good relationship with your insurance company, it also doesn’t hurt to ask for their advice on how to lower your rates. Depending on your location, they might be able to give you some actionable intelligence. This will not only help you lower your rates after the inspection but also make your property safer in general.

Never shy away from a home inspection. If you’re worried that your rate might increase, then it might be more sensible to fix certain problems, improve certain systems, and enhance the overall maintenance of your property before the inspection rather than trying to fight the idea itself. 

Leave a Comment

Your email address will not be published. Required fields are marked *