Why Some Major Insurance Companies Now Require a 4-Point Inspection for Older Commercial Buildings at Renewal Time
As a commercial property owner, you may have noticed a recent shift in the requirements from your insurance carrier, especially if your building is over 30 years old. One change that’s catching many by surprise: the growing demand for a 4-point inspection at the time of policy renewal.
So, what’s driving this change, and what exactly is a 4-point inspection? Let’s break it down.
What Is a 4-Point Inspection?
A 4-point inspection is a focused evaluation of the four primary systems of a property:
- Roof
- Electrical
- Plumbing
- HVAC (Heating, Ventilation, and Air Conditioning)
Unlike a full property inspection, a 4-point inspection zeroes in on these critical systems because they pose the greatest risk for insurance claims—especially in older buildings where aging components can lead to costly issues like water damage, fire, or structural failure.
Why Insurance Companies Are Requiring It
There are several reasons why major insurers are tightening their underwriting standards for older commercial properties:
1. Rising Claims Costs
The cost of repairing or rebuilding commercial properties has skyrocketed in recent years due to inflation, labor shortages, and supply chain issues. Insurance companies want to minimize the risk of underwriting buildings that may be ticking time bombs due to neglected systems.
2. Loss Prevention
By identifying aging or unsafe systems early, before a claim is filed, insurance providers can require updates or repairs, reducing the chance of a major payout later on.
3. Regulatory Pressure
In some regions, state regulations are pushing insurance providers to verify the insurability of older buildings more rigorously. A 4-point inspection provides the documentation carriers need to stay compliant.
4. Underwriting Reevaluation
Many insurers are reevaluating their portfolios after years of underwriting losses, especially in high-risk regions or for older structures. Requiring a 4-point inspection is a way to gather more data and make informed decisions about renewing or adjusting a policy.
What This Means for Building Owners
If your commercial building is approaching the 30-year mark—or already there—don’t be surprised if your insurer asks for a 4-point inspection when your policy comes up for renewal. Here’s how to be proactive:
- Schedule an inspection before your renewal date. This gives you time to address any red flags.
- Keep records of recent upgrades or repairs. Replacing a roof or updating your electrical panel? Documentation helps you show that the building is well-maintained.
- Work with a qualified inspector. Look for professionals experienced with commercial properties, especially ones who understand the specific expectations of insurance carriers.
Final Thoughts
At Bright Leaf Commercial Property Inspections, we specialize in providing 4-point inspections tailored for small office buildings and older commercial properties. We understand what insurers are looking for and help you stay ahead of any issues that could affect your coverage or premiums.
If your insurer has requested a 4-point inspection—or you want to get ahead of the curve—email Michele@BrightLeafPS.com to schedule an appointment.
