What is a 4 point inspection?
The Four Point Insurance Inspection is a little known inspection service being offered, for a fee, by the inspection profession in some specific areas. It appears however, that this service opportunity is expanding. The following is provided as background information about this program.
The Four Point Insurance Inspection was created after Hurricane Andrew struck Florida in 1992. It is performed on behalf of the insurance companies and, typically, as a requirement for the insurer offering insurance to the new homeowner. After last year’s barrage of hurricanes in Florida, the Four Point Insurance Inspection has taken on added importance. As insurance companies are beginning to see the benefit of the inspection, the program is spreading to other areas of the country. The benefit to the insurance company is, obviously, reduced loss risk on homeowner’s insurance policies. This is an area of business that has, for many years, been a money loser for insurance companies.
In 2002, the Florida Legislature passed a law that combined the Florida Residential Property and Casualty Joint Underwriting Association (FRPCJUA) and the Florida Windstorm Underwriting Association (FWUA). This resulted in the creation of Citizens Property insurance Corporation (Citizens), which more efficiently and effectively provides insurance to, and serves the needs of, homeowners in high-risk areas and others who cannot find coverage in the open, private insurance market. It is funded by premiums paid by the insured and from other insurance companies paying into the program to reduce their overall losses.
Citizens operates under the direction of a seven-member Board of Governors, appointed by the State Treasurer for three-year terms, representing geographically diverse regions of the state. The State Treasurer also appoints a technical advisory board to provide information and advice to the Board of Governors.
While Citizens operates only in Florida, I personally know an inspector in central Missouri who has transitioned his entire business into one that deals only with insurance companies. He has shared with me some impressive statistics showing how he has saved the small regional companies he deals with substantial money.
The Four Point Insurance Inspection consists of the following four systems:
- Roof Inspection
- Electrical Inspection
- HVAC (Heat, Ventilation & A/C)
The insurance companies are looking for the four systems to be in generally good working condition and fulfilling their intended function. If the home is an older home the insurance companies want to see that the systems have been updated. In most cases, the forms are provided by the insurance companies to their clients. The clients then ask the inspector to fill the form out during the course of the home inspection.
There are other types of specialized programs that are similar in nature to this type of inspection and may exist in specific markets. For example, some states require low income buyers to obtain an inspection of a home prior to purchase to obtain a low interest loan. In Missouri, for example, the Missouri Housing Development Commission (MHDC) has an inspection requirement that is similar to a Four Point Insurance Inspection. Another example would be in California where many homeowner insurance companies require verification of foundation attachment for homes built prior to 1965.
In summary, the Four Point Insurance Inspection program is gaining in popularity and will likely continue to expand as the insurance companies recognize the value of the inspection and the savings benefits it provides to the insurance carrier.