Complete Guide: Home Inspections & Insurance - What Colorado Homeowners Need to Know
The Complete Guide: Home Inspections and Insurance Coverage
What Every Colorado Homeowner Needs to Know
When you're buying a home in Colorado Springs or anywhere in the state, two critical steps often happen around the same time: scheduling a home inspection and securing homeowners insurance. But many buyers don't realize how interconnected these two processes are—or how a thorough inspection can save you thousands in insurance claims down the road.
As an independent insurance agent serving Colorado families for years, I've seen firsthand how home inspection findings directly impact insurance coverage, premiums, and claim outcomes. Here's what you need to know.
Why Home Inspections Matter for Insurance Coverage
1. Insurability Issues Can Kill Your Policy
Your insurance company wants to know they're not taking on excessive risk. If a home inspection reveals major issues, insurers may:
Deny coverage entirely until repairs are made
Exclude specific coverage (e.g., water damage if there's a known plumbing issue)
Charge significantly higher premiums to offset the risk
Require reinspection before finalizing the policy
Common inspection findings that raise red flags for insurers:
Outdated electrical systems (knob-and-tube wiring, Federal Pacific panels)
Roof damage or age over 20 years
Foundation cracks or structural issues
Plumbing problems (polybutylene pipes, active leaks)
Evidence of water damage or mold
HVAC systems nearing end of life
Fire hazards (wood-burning stoves without proper clearance)
Colorado-specific concerns:
Hail damage to roofs (extremely common in Colorado Springs and along the Front Range)
Crawl space moisture issues
Wildfire mitigation needs (especially for mountain/interface properties)
Aging sewer lines susceptible to tree root intrusion
The Sewer Scope: The Most Overlooked Inspection Item
One of the most critical—and frequently skipped—inspections is the sewer scope. This involves inserting a camera into your sewer line to check for:
Cracks, breaks, or collapses in the pipe
Tree root intrusion
Bellied (sagging) pipes that trap waste
Outdated materials (cast iron, Orangeburg pipe)
Why This Matters for Insurance:
Standard homeowners insurance does NOT cover:
Sewer line repair or replacement (can cost $3,000-$15,000+)
Damage caused by sewer backups (unless you have specific endorsement coverage)
Gradual deterioration or lack of maintenance
What a sewer scope can reveal: If you discover issues during the inspection period, you can:
Negotiate for the seller to repair/replace the line
Factor repair costs into your offer
Add sewer backup coverage to your policy (typically $40-100/year)
Budget for future replacement instead of being blindsided
Local Recommendation:
If you're buying a home in Colorado Springs and need a sewer scope inspection, PremierOne Home Inspections offers thorough sewer scope services. They provide detailed reports with video footage so you can see exactly what's happening underground. (Mention you're a Main Street Insurance client for $25 off—bringing the service to $150.)
How Insurance Companies Use Inspection Reports
During the Underwriting Process:
When you apply for homeowners insurance, carriers often require:
4-Point Inspection (for homes 25+ years old or vacant over 60 days)
Roof condition and age
Electrical system
Plumbing system
HVAC system
Wind Mitigation Inspection (less common in Colorado, more common in coastal states)
Evaluates storm resistance features
Can reduce premiums significantly
Photos of the Exterior
Some insurers use aerial/satellite imagery to assess roof condition
May request updated photos if they see potential damage
After You Move In:
If you file a claim, the insurance adjuster will compare damage to your original inspection report. This is why you should never hide known issues.
Example scenario:
Home inspection reveals a small roof leak
You buy the home without repairing it
Six months later, you file a claim for water damage
Adjuster finds the leak was pre-existing → Claim denied
The lesson: Disclose everything to your insurance agent. We can often still get you covered, but we need to know upfront.
What to Do When Your Inspection Reveals Problems
Option 1: Negotiate Repairs with the Seller
Request that the seller fix critical issues before closing. Focus on:
Items that affect insurability (roof, electrical, structural)
Safety hazards
High-cost repairs
Option 2: Request a Price Reduction
If the seller won't make repairs, negotiate a lower purchase price to cover future costs. Use contractor estimates to justify the amount.
Option 3: Walk Away
If inspection findings reveal more risk than you're comfortable with—especially if insurance will be difficult to obtain—don't be afraid to walk away during your inspection period.
Option 4: Adjust Your Insurance Coverage
Some issues can be addressed with policy adjustments:
Old roof? Consider higher deductible to lower premiums, then plan to replace within 1-2 years
Known plumbing concerns? Add equipment breakdown coverage or water backup protection
Aging home systems? Budget for higher maintenance and consider a home warranty for the first year
Insurance Coverage You Should Consider After a Home Inspection
Based on common inspection findings, here are endorsements that often make sense:
1. Water Backup Coverage
Covers: Sewer/drain backups, sump pump failures
Cost: $40-150/year
When you need it: Older homes, properties with finished basements, areas with clay soil (like Colorado Springs)
2. Equipment Breakdown Coverage
Covers: Mechanical failure of HVAC, water heater, appliances
Cost: $30-75/year
When you need it: Homes with aging systems (10+ years old)
3. Ordinance or Law Coverage
Covers: Cost to bring your home up to current building codes after a covered loss
Cost: Varies (often 25% of dwelling coverage)
When you need it: Older homes that may not meet modern codes
4. Service Line Coverage
Covers: Repair/replacement of underground utility lines (water, sewer, electrical, gas)
Cost: $50-100/year
When you need it: Homes with aging infrastructure, properties with mature trees
5. Increased Replacement Cost Coverage
Covers: Extended replacement beyond your dwelling limit (often 125-150%)
Cost: Included with many policies or small additional premium
When you need it: Markets with rapid construction cost inflation (like Colorado)
Colorado-Specific Insurance & Inspection Considerations
Hail Damage
Colorado has one of the highest rates of hail damage claims in the country. During your inspection:
Ask the inspector to check for roof hail damage (even minor dings can lead to leaks)
Request documentation of roof age and condition
Consider impact-resistant shingles when replacing (may qualify for insurance discounts)
Wildfire Risk
If you're buying in the wildfire interface (mountain areas, foothills):
Inspection should note defensible space and fire-resistant materials
Insurance may be difficult to obtain without mitigation efforts
Consider FireWise certification to improve insurability
Freeze Risk
Colorado's temperature swings can cause:
Frozen/burst pipes (especially in crawl spaces)
Ice dams on roofs
HVAC failures during extreme cold
What to look for in inspection:
Proper insulation in crawl spaces and attics
Pipe insulation in vulnerable areas
Adequate heating in all areas of the home
The Insurance Agent's Perspective: What I Wish Every Buyer Knew
After working with hundreds of Colorado homebuyers, here's my advice:
1. Don't Skip the Inspection to "Save Money"
I've seen buyers waive inspections in competitive markets, only to discover $20,000+ in repairs after closing—and then find out their insurance won't cover pre-existing damage. The $400-600 inspection cost is the best money you'll spend.
2. Share the Inspection Report with Your Insurance Agent
Bring me into the loop early. I can:
Advise on which findings will affect your coverage
Help you prioritize repair negotiations
Get quotes before you close (so there are no surprises)
Recommend coverage enhancements based on what the inspection reveals
3. Don't Hide Problems from Your Insurer
Misrepresenting your home's condition is insurance fraud—and it will come back to bite you when you file a claim. Honesty is always the best policy (pun intended).
4. Use Local Professionals
Colorado has unique challenges (hail, wildfire, freeze risk, altitude effects on HVAC). Work with inspectors and insurance agents who understand our local conditions.
5. Think Long-Term
Your home inspection is a snapshot in time. Use it to:
Create a 5-year maintenance plan
Budget for major replacements (roof, HVAC, water heater)
Understand your home's vulnerabilities
Make informed insurance decisions
Your Home Inspection + Insurance Checklist
Before Your Inspection:
Choose a reputable, licensed inspector (ask your realtor or agent for recommendations)
Add a sewer scope if the home is 20+ years old or has mature trees
Request detailed photo documentation
Plan to attend the inspection (even if you're not required to)
During Your Inspection:
Ask questions about anything you don't understand
Take your own photos/notes
Focus on safety and insurability issues first
Get cost estimates for major repairs
After Your Inspection:
Share the full report with your insurance agent
Negotiate repairs or price reduction with the seller
Update your insurance coverage based on findings
Create a home maintenance plan for ongoing care
Keep the inspection report for future reference (and future claims)
Before Closing:
Confirm all negotiated repairs are complete
Finalize your insurance policy (must be in place at closing)
Add any recommended coverage endorsements
Verify you have proper coverage limits based on rebuild costs
The Bottom Line: Inspections Protect Your Insurance (and Your Wallet)
A thorough home inspection isn't just about finding problems—it's about understanding your home so you can:
Secure proper insurance coverage from day one
Avoid claim denials due to pre-existing conditions
Budget for future maintenance and avoid financial surprises
Negotiate effectively with sellers
Protect your investment for decades to come
At Main Street Insurance - Patrick Murakami Agency, we work with Colorado homebuyers every day to navigate the intersection of home inspections and insurance. Whether you're buying your first home or your fifth, we're here to help you make informed decisions that protect what matters most.
Get Expert Insurance Guidance for Your Colorado Home
Have questions about how your home inspection findings affect your insurance?
📞 Call us: (719) 309-6439
📧 Email: patrickm@themainstreetagency.com
🌐 Visit: insurancewithapurpose.com
📍 Located: 5214 N Nevada Ave Suite 100, Colorado Springs, CO 80918
We're proud to serve Colorado Springs and surrounding communities with independent insurance advice you can trust. Let's review your home inspection together and build a coverage plan that protects your investment.
About the Author
Patrick Murakami is an independent insurance agent and owner of Main Street Insurance - Patrick Murakami Agency in Colorado Springs. With years of experience helping Colorado families protect their homes, Patrick specializes in translating complex insurance concepts into practical advice. He's passionate about educating homeowners on the connection between property maintenance, inspections, and insurance coverage.
Disclaimer: This article is for educational purposes only and does not constitute insurance advice. Coverage availability, terms, and pricing vary by carrier and individual circumstances. Always consult with a licensed insurance professional for guidance specific to your situation.
