The Florida 4-Point Insurance Report

Your offer was accepted. You did your due diligence, or maybe you didn’t…maybe you’re just delighted at the prospect of being a homeowner in Florida. You paid over list price; no big deal…homes in Florida are still a bargain compared to many areas around the country, and you beat 16 competing offers to get this house! Maybe you even waived inspections.

While we would never advise any homebuyer to waive valuable due diligence like home inspections and termite inspections, most likely, you will need a 4-Point insurance report to obtain property insurance for closing. Not only is this report critical for you to obtain coverage, it is critical to keep coverage "after closing" and that is something you need to be critically aware of.

How is it possible an insurance carrier can issue coverage and then cancel coverage (or threaten to) a month later? According to the industry, they may not have had time to fully review the insurance report before issuing the binder to close…and it's perfectly legal.

The 4-Point Insurance Report

The Florida 4-Point Insurance Report is really not "4-Points" anymore. It has morphed into a mini-home inspection based on the carriers' demands for increased documentation. These reports now run 8-20 pages in length and there is an increased liability to the inspector in the event of a claim later. You see, carriers now add a disclaimer to the homeowner policy with words to the effect, "based on a report issued by XYZ Home Inspections". If the inspector fails to note even minor concerns like water stains on ceilings, the carrier may defer or deny coverage later citing they were not aware of the concern when they issued the policy. I assure you most home inspectors are not capable of producing the coverage, you may need in the event of a large claim as a substitute for an insurance carrier. Ergo, even though you may not want the inspector to note all deficiencies which may complicate your ability to obtain coverage, you really should.

Cancellation of Coverage

Cancellation notices generally allow the homeowner a short opportunity to make repairs/upgrades to avoid cancellation. This window may be between 10 and 30 days. Cancellation notices may be based on many factors but the most common we see include:

• Aged or compromised roof coverings
• Aged or compromised appliances such as water heaters or AC systems
• Water stains on ceilings
• Aged or compromised plumbing piping/valves
• Aged or compromised electrical panels
• Aged or compromised electrical wiring
• Tree limbs in contact with roofs
• Water damage or wood rot to exterior siding/trim
• Blacklisted electrical panels and water piping

Many new homebuyers or buyers moving to Florida from other states are shocked to discover their home may not be insurable as a new owner. Many mistakenly assume since the seller had coverage, a new buyer would be equally able to obtain coverage but it doesn't work that way.

Florida Homes

Our Florida homes are bombarded with exposure to moisture, wind, sunlight, and insects like termites. If you are purchasing real estate, you are well-advised to hire the best home/termite inspector possible to protect you against what you may not know. While the insurance reports, at one point, simply documented what was present, they have become critical today in protecting you from cancellation after closing.

Few new homebuyers are able to replace roofs, HVAC systems, electrical and plumbing components costing thousands of dollars a month or two after closing on their home or paying thousands of dollars for force-placed insurance coverage.

When it comes to insurance coverage, slow down and pay attention to who you're hiring for insurance reports. Take the time to fully understand the significance of what is being reported and talk frankly to your agent about the "what-ifs".

Home Inspections with Property360

Property360 provides home inspections, WDO/termite inspections, 4-point and wind mitigation reports, EIFS/stucco inspections, lead paint and asbestos inspections, forensic moisture inspections, balcony inspections, and building related consultation to the greater Jacksonville, Orlando, Gainesville, and Lake City metro areas. Contact us at (904) 606-1570 to request an inspection today!