New Citizens 4-Point Insurance Guidelines Complicate Insurability of Homes Over 30 Years Old and Reduce Hopes for An “AS-IS” Sale. It’s Feared Other Insurance Companies Will Follow!

Citizens Property Insurance Corporation announced major changes in the requirements for 4-Point Insurance Inspections. These changes were first shared with Florida insurance agents in Citizens Bulletin 02.09.18

The purpose of the updates to the 4-Point Insurance Form (Insp4pt 01 18) and Roof Inspection Form (RCF-1 01 18) as stated by Citizens is “to evaluate risks better and determine whether a property meets Citizens’ eligibility guidelines”.

According to the Citizens Bulletin dated February 09, 2018 “Agents and licensed inspectors should begin using the updated forms immediately. After September 1st 2018 if the agent submits a previous version of the form(s), Underwriting may request additional information of create other underwriting actions”.

Underwriting requesting additional information is never easy or inexpensive!

The updated Citizens 4-Point Insurance form requires significantly more information than previous forms as well as an extensive list of photographs. The updated Citizens 4-Point Insurance form is 9-pages long. They should have renamed it the 99-Point Insurance Form!
There are numerous specific points of detailed documentation to include:

-Separate documentation of any aluminum wiring remediation must be provided and certified by a licensed electrician as well as documentation of any “hazards present”. The list of hazards includes “empty sockets, improper grounding, corrosion, double taps and exposed wiring” as examples.

-On the HVAC system “Date of last HVAC servicing/inspection” as well as “air handler/condensate line OR drain pan signs of blockage or leakage, including water damage to the surrounding areas”.

-On the Plumbing system in addition to extensive photo documentation of all valves for corrosion, there is now a requirement to report on the condition of ALL plumbing fixtures and appliances with specific comments on “leaks, wet/soft spots, mold, corrosion, grout/caulk, etc.”!

-On the roofing system again extensive photo requirements as well as the requirement to inspect for signs of roof leaks in the interior of the home and an attic inspection. The date of the last roofing permit is also required.

The examples above are by no means the entirety of the new requirements, rather intended to ensure that you are aware that change is upon us. While this change will reduce risk to Citizens Insurance and likely result in fewer homes being insured by Citizens, it is going to be a nightmare for agents who are not proactive in preparing for sellers and buyers for these requirements. And if other companies do follow Citizens, expect major disruption in obtaining homeowners insurance for your customers.

This burden placed by Citizens on inspector reporting is not unlike the burden place on appraisers to report property condition concerns on the appraisal report. And we all know what a mess that was to sort!

Now more than at any time in real estate history, inspections at the time of listing are imperative! To wait to inspect until the there is a contract for sale is to risk killing your own deal.

You simply cannot wait until buyer and seller have completed negotiations to then introduce this insurance mess into the transaction. Bad news does NOT get better with time! You must have this information in your hands and the seller’s hands BEFORE a buyer ever sees the home.

Pre-inspecting will put you and your seller in control of repairs to avoid any insurance road-blocks or to choose to disclose problems and price the home such that the buyer can correct them to the satisfaction of Citizens.

There may be a temptation by some to suggest that this more robust 4-Point could replace the home inspection. Citizens warns on the new form “This information only is used to determine insurability and is not a warranty or assurance of the suitability, fitness of longevity of the systems inspected.”

Communication and education cure all problems. It is for that reason that Residential Inspector of America has prepared a 45-minute program to help you and your office to understand the specifics of the new Citizens Guidelines and to share ideas on how best to navigate the requirements and get contracts closed. Call (904) 590-1306 to schedule a time to bring this program to your office.