Insurance perspective:Risk, simply stated, is the probability that an event could occur that causes a loss. For an insurance company, risk will determine whether or not they may have to pay a claim. The amount of perceived risk being underwritten by an insurer will be used by you, the underwriter, to decide whether or not an insurance policy should be written for a particular individual. If the answer is yes, an accurate amount of premium to charge the insured to cover their particular insurance risk must be determined. For the insured, higher insurance risk means higher policy costs.
While all risks cannot be avoided, steps can be taken to mitigate the cause of many risks and lessen the effects of events caused by them. Wearing seatbelts is a good example. Maintaining a tidy home with good security and regular maintenance is another. Requiring a inspection of your home insurance applicants can help ensure lower risks.
While a home inspection may be ordered to benefit the insurance company underwriter to aid in underwriting efforts, it also provides a number of benefits for the homeowner as well.
- It can give the homeowner the peace of mind of knowing that their home is both safe and structurally sound.
- By uncovering potential risks that could later lead to insurance claims, an inspection can save a homeowner time, trouble, and money by averting problems that are headed off before damage is caused or someone gets injured.
- Since the insurance company may offer discounts to homeowners for having certain systems in place for protection against fire and/or burglary, the inspection may bring potential discounts to the policy.
- A professional inspection can help the homeowner know if they have the correct amount of insurance protection in place for their specific situation. Paying for too much protection is a waste of money. Having too little protection can be disastrous if a major claim is submitted.
Lender’s perspectiveMortgage lenders use appraisals to make sure the home is worth the amount they’re lending. An appraiser doesn’t go over the fine details of the home, but rather looks at local property values.
An inspection may uncover unexpected risk that the lender may not be aware otherwise.
A property inspection provides benefits to the lender and also the occupier by listing all the features and risks associated with the property.