Insurance is all about managing and mitigating risk. When you purchase an insurance policy, you’re essentially entering into a partnership with your insurance carrier, where they agree to cover the financial risks of damage or loss in exchange for a premium. To accurately assess the risk they’re taking on, insurance companies will likely want to conduct an inspection of your building and surrounding property, such as the sidewalk, courtyards, etc.
Carriers want to ensure they fully understand the condition of everything they have agreed to insure. This allows them to evaluate the likelihood of potential claims, such as fire or water damage. For example, an older roof may be more prone to leaks, while a property with overhanging trees could increase the risk of windstorm damage. Identifying these hazards helps the insurer understand whether they feel certain improvements or repairs should be made to reduce the likelihood of a loss.
Safety is a major concern for insurance companies, and inspections allow them to identify potential hazards that could lead to accidents or injuries. Issues such as broken railings, damaged steps, or unsafe wiring pose a greater risk of accidents, which could lead to property and/or liability claims. During an inspection, the insurance carrier may identify these safety concerns and require the building to address them before renewing a policy or even cancel coverage if the insured does not comply.
It is important to note that an insurance company can make recommendations that are not required by city or other codes. It is their option. Many insureds are grandfathered in, meaning if the building were being built now, they would have to build it complying with current ordinance laws, but since the building was built previously, they do not have to be in compliance. Though they may not be required by code to make these additions or renovations, the insurance company can require it in order to provide coverage.
Inspections also allow carriers to assess any modifications or renovations that may not have been previously reported, meaning that the property could be underinsured. An inspection can uncover these unreported changes, allowing the carrier to adjust the coverage accordingly and confirm that the building is still in line with the carrier’s guidelines.
While insurance inspections might sound daunting, they can actually benefit building owners by identifying potential risks and suggesting ways to reduce them. An inspection can uncover issues that the owner may not be aware of, giving them the opportunity to address these concerns before they become costly problems. Inspections ensure that the property is adequately protected and safe, giving building owners peace of mind for their property and residents.
Inspections are an essential tool that insurance carriers use to assess risk, ensure the accuracy of information, and provide the right coverage for their insureds. While the inspection process may seem like an extra step, it plays a critical role in creating a safer, more accurate, and efficient insurance experience for both carriers and insureds. By addressing potential risks upfront, associations can enjoy better coverage, safer living conditions, and more affordable premiums in the long run.
