By Keith Swift, PhD
InterNACHI member/InterNACHI Report Writing Consultant
President, Porter Valley Software
Where I do business, sellers are typically encouraged by real estate agents to
purchase a home protection policy for the potential buyer. This typically costs
the sellers about $350.00, and gives them the false security that if anything
goes wrong with their house after they sell it that the new buyers will simply
call the insurance company who will immediately sent someone out to make repairs
or replacements. Nothing could be further from the truth. Nevertheless, many real
estate agents continue to use home protection policies as a sale’s tool. “You
don’t have to worry about anything,” I’ve often heard them say to buyers during
my inspection, “if anything goes wrong, all you have to do is pay $45.00 for the
service call and they’ll come right out and repair or replace things.” But what
really happens? When something does go wrong, as it will in every residence, the
home owner calls the insurance company, a representative arrives and, after collecting
the fee, commonly finds some reason to refuse service. “It was a pre-existing
condition, or a code violation,” the representative commonly asserts, “which is
not covered under the policy.” And they are notorious for adding that the home
inspector is really at fault for not having warned them. And, naturally, the next
call that is made is to the inspector. I don’t know whether this is a common occurrence
across the nation, but I can think of at least five incidents in which this occurred
in my area recently, and not one of them was valid. If this has happened to you,
you may wish to give your clients the same advice that I give mine, which is as
follows, and which you are welcome to use as your own.
You should not regard this inspection and report as a guarantee or warranty of
the property and its components. It is not. It is simply a report on the general
condition of the property at a given point in time. Furthermore, as a homeowner,
you should expect problems to occur; roofs will leak, drain pipes will become
blocked, and components and systems will fail without warning. For these reasons,
you should take into consideration the age of the house and its components and
keep a comprehensive insurance policy current. If you have been provided with
a home protection policy, read it carefully. Such policies usually only cover
insignificant costs, such as that of rooter service, and the representatives of
some insurance companies are very likely to charge you for a service call and
then deny coverage on the grounds that a given condition was preexisting or not
covered because of an alleged code violation or a manufacturer’s defect. Therefore,
you should read such policies very carefully, and depend upon our company for
any assistance and consultation that you may need.
