Is Aluminum Wiring Keeping Your Client From Getting Insurance Coverage?

Home inspections often turn up surprising results. Even insurance inspections, like Four Point inspections, often turn up surprises that home buyers and even owners are unaware of. When a home reaches 25 to 30 years old, or 10 years for a manufactured home, it will be required to have a Four Point inspection done to obtain or renew insurance coverage. The electrical service panel is one of the areas of the home that is included in this inspection.

Asidefrom double-taps (two wires under one screw), aluminum wiring is one of the most common electrical panel surprises. There are two basic types, single-strand solid aluminum wiring and multi-brand aluminum branch wiring.

Single-strand aluminum wiring is considered a hazard by nearly all insurance companies and can prohibit your client from obtaining property insurance. It is considered a hazard because aluminum is a very poor conductor of electricity compared to the standard copper wiring. This means that the wires have to be much thicker to handle the same amount of current. The connections between wires are prone to overheating due to becoming brittle and have been known to cause fires.

One of the primary methods of remediating single-strand aluminum wiring is installing COPALUM crimp connectors. COPALUM connectors would need to be installed at every junction box in the home and are “crimped” over any aluminum wire connections. The average home has around 100 junctions, and COPALUM connectors range from $32 to $65 installed per junction box. In order to obtain or renew insurance for these homes, documentation of these repairs will need to be provided to the insurance company. A similar product, Alumiconn, has been used for many years to remediate single-strand aluminum wiring, but is rapidly losing favor with many insurance companies and may not be considered a complete remediation.

The other primary method of remediating single-strand aluminum is rewiring the entire home with copper wire. Some homes are still entirely wired with aluminum, while others only have single-strand aluminum wire to some outlets or switches. This makes it hard to know exactly how much to budget to have the wiring replaced. Our clients have told us that the estimates they have received have been in the neighborhood of $6,000 to $8,000 for completely re-wiring their homes with copper wire.

The other type of aluminum wire is multi-strand aluminum branch wiring. This type of wiring is still used today for incoming service lines and/or dedicated to a major appliance, like a stove or air conditioner. Approximately 80% of the homes that we inspect have this wiring present.

According to our e-mail correspondence with Sandra Starnes, Director for the Florida Office of Insurance Regulation, individual insurance companies have the right to choose whether or not they will provide coverage on homes with this type of wiring. After speaking with several insurance agents, the list of carriers that will cover this type of wiring is very short.

For many owners or buyers of these homes, Citizen’s is often the only option for guaranteed insurance coverage. Even then, getting the policy written can be a major hassle for the client and their insurance agent. We have gotten several calls from clients who have stated that Citizen’s would not cover their multi-strand aluminum branch wiring. Citizen’s issued an agent informational e-mail on March 26, 2011 in reference to this issue that states: “Homes with aluminum main service wires and heavier 240 volt circuits that feed major appliances (e.g., dryers, ranges, air conditioners) are eligible for coverage with Citizens.” Many agents within Citizen’s are still unclear about the differences between different types of aluminum wiring.

Should you or your client have difficulty obtaining insurance coverage over this issue, please call us at (941) 749-1152 and we will be happy to assist you in clarifying the issue.

Click here to find out what the International Association of Certified Home Inspectors (InterNACHI) has to say about aluminum wiring.

What is a Four Point Inspection and Do I Need It?

Manatee Home Inspection Services, LLC inspects hundreds of homes every year for various reasons. The most common inspections are for real estate transactions and/or insurance. Four Point Inspections are the most common insurance inspection that we do for our clients, particularly since homes that are 25 to 30 years or older, or manufactured homes 10 years or older, are required to have one done to obtain or renew property insurance coverage.

A Four Point Inspection form provides the insurance company with a fairly accurate assessment of the home’s risk of damage due to a failure of one of its major systems. NEVER provide the insurance company with a copy of the full inspection report where your inspector was looking for defects that would affect the real estate transaction. Most of the defects we find are minor, however insurance companies have been known to make a mountain out of a mole hill over these minor defects, causing major headaches for home buyers.

The four major systems covered by a Four Point Inspection are:

·         Electrical Panel – includes the age, service amperage, wire type(s), brand name, and any hazards of the electrical service panel

Common Defects: Double-taps (twowires under one screw), aluminum wiring (single or multi-strand) and hazardous electrical panel brands (like Stab-Lok). Any of these defects will affect insurance coverage and/or availability.

·         HVAC – includes the age, type, portability, and functionality of the home’s heating and air conditioning equipment, including stoves and fireplaces.

Common Defects: Central heating system does not work and heat is supplied by space heaters. Homes in Florida must have a permanently-installed heat source in order to obtain insurance coverage. The very presence of portable space heaters, even with a working permanently installed heat system, could affect the insurability of the home.

·         Plumbing – includes the age, piping material, functionality, and presence of leaks for the home’s plumbing system, including the water heater.

Common Defects: While all leaks are a concern, leaks from the water supply lines and/or water heater are the most common defect that will affect the insurability of the home.

·         Roof – includes the age, remaining useful life, material(s), and condition of the home’s roof system, including any signs of leaks or damage.

Common Defects: If the roof is within less than 3 to 5 years of the end of its useful life, or has defects such as heavy granule loss, missing/lifted/curling shingles, missing tiles, severe corrosion (metal roofs) or visible sagging in the roof deck, the insurance company will likely require that a new roof be installed in order to obtain or renew insurance coverage.

While your inspector will be reporting on all of the above mentioned systems, it is important to note that a Four Point Inspection is much less comprehensive than and is not a replacement for a full home inspection. A Four Point Inspection, depending on the age and condition of the home, could take as little as 15 minutes to complete. An average full home inspection takes around 1 to 2 hours, even when the home is in good condition. It is also important to note that a Four Point Inspection does not cover any defects in the structure of the home itself, which could cause major issues for a home buyer if these defects are not found like they would be during a full inspection.

The only exception to the previously mentioned age rules for a Four Point Inspection requirement is for clients who have property insurance coverage with or are seeking coverage with State Farm Insurance. Recent company policy changes include a much more comprehensive Four Point Inspection form than what other insurers require (most companies want the Citizen’s form), and requiring this form for all homes that are 6 months old or older.

The new form that State Farm requires is closer to a full inspection than it is to the traditionally accepted Four Point form, including information about the home’s appliances, pool, detached structures, energy sources, and overall condition. While it is still not a replacement for a full inspection, the State Farm Four Point form is much more comprehensive. It is also important to note that State Farm Insurance agencies cannot write State Farm policies within 2 miles of any coastline. In these cases, the Citizens’ Four Point form is still acceptable.

For more information about Four Point Inspections, or to schedule your Four Point Inspection for only $75 (discounted to $50 when done with a full inspection), please call our office at (941) 749-1152.