I received a very odd phone call last week; a customer (I'll call Mary) called to tell me her insurance company was dropping her policy immediately after reading my inspection report for her home. They told her there were 'too many problems'. I’ve heard of insurance companies having specific reasons for denying insurance, but never such an ambiguous reason as ‘too many problems'. I’m wondering if this is going to become a trend.
Mary jokingly told me that she should have hired a crappy inspector, but she was really looking for advice on what to do. I asked Mary what would have happened if she had not given her insurance company a copy of her report? Mary said her insurance company requires any house that is over 40 years old to have a professional home inspection performed. That made me wonder – how do insurance companies define a professional home inspection? In Minnesota there is no such thing as licensing for home inspectors, so anybody can call themselves a professional home inspector.
Out of curiosity and annoyance with her insurance company, I asked if a one-page document with a few of my recommendations would have sufficed, and she said it probably would have, but it’s too late now. Once an insurance underwriter makes up their mind, it’s a done deal. Or so I’ve heard.
I was able to refer Mary to a friend that works for Farmer’s Insurance, and she ended up getting a new policy for her home and car with him the same day (and hopefully saved some money!). Mary had already tried a couple other companies, but as part of their screening process they asked if she had ever been denied insurance, and she was too worried about getting denied again to go any further in the process. Farmers Insurance doesn’t ask about that.
While this was a strange situation because there wasn’t anything that specifically made the company deny insurance, there are some specific things that you can look for. Many insurance companies will require correction of these conditions before insuring the home:
• A fused electric service.
• Roof problems. Some insurance companies perform their own drive-by inspection (where they don’t even climb on the roof), and if they don’t like what they see, they’ll require replacement of the roof at the owner’s expense. There is no arguing with the insurance company about this decision.
• Tree problems. My friend at Farmers Insurance said that his company is on a big ‘tree kick’, where they get very picky about tree branches being too close to the house.
If you’re in the market for a house, I recommend checking with your insurance agent early in the process for any red flags that you should know about ahead of time. This quick phone call might save you a lot of hassle in the future.
Reuben Saltzman, Structure Tech Home Inspections – Email – Minneapolis Home Inspector
