In a competitive real estate market, buyers sometimes waive inspections to make their offer more attractive. They may decide they’re comfortable accepting the house as it sits, including the aging roof, outdated electrical panel or other conditions they might otherwise have investigated during an inspection period.
That’s a decision the buyer can make. It doesn’t mean the insurance company has made the same one.
Obtaining homeowners insurance often feels like a simple item on the home-buying checklist. Call an insurance agent, provide the property address and some information, receive a quote, send it to the lender and move on. But getting an insurance quote and establishing that a particular property is insurable are not the same thing.
Major insurance carriers describe homeowners quotes as estimates rather than contracts or guarantees of coverage. An application may still be subject to underwriting, and the insurer may need additional information about the property before deciding whether it will insure it.
That distinction matters because the standard St. Louis residential sales contract doesn’t simply tell buyers to get an insurance quote. It contains a separate contingency specifically addressing insurability.
Your Inspection Period and Insurability Period Do Different Jobs
Paragraph 10 of the St. Louis REALTORS® Residential Sale Contract deals with property inspections. Under the standard language, a buyer has 10 days unless a different period is inserted to conduct inspections and exercise the rights provided under that contingency.
Paragraph 10a addresses something different. It says the contract is conditioned upon the buyer’s ability to obtain homeowner/hazard insurance. Unless another period is specified, that Insurability Period is also 10 days.
The two periods may run alongside each other, but they answer different questions.
The inspection contingency asks whether the buyer is willing to accept the house. The insurability contingency asks whether an insurance company is willing to accept the risk.
A buyer can review what they know about a property’s condition and decide they’re comfortable proceeding. That decision doesn’t bind the insurance company, which evaluates the property for a different purpose and under its own underwriting requirements.
What If You Waived Inspections Entirely?
This is where the contract gets particularly interesting.
Paragraph 10a specifically anticipates that an insurance company may require an inspection and says that, if one is required, it must be completed before the Insurability Period expires.
Paragraph 19 goes even further. It requires the seller, with reasonable advance notice, to permit inspections required by the buyer’s lender or insurer.
So a buyer can decide not to inspect the property for their own purposes, while an insurance company can still decide it needs additional information or an inspection before accepting the risk.
Waiving an inspection doesn’t make an insurer’s underwriting requirements disappear.
So What Did That Insurance Quote Actually Tell You?
A quote is useful. It gives a buyer an idea of what coverage may cost.
What it doesn’t tell the buyer is whether the insurer has finished evaluating the property.
That’s why there is a meaningful difference between asking:
“How much will homeowners insurance cost on this house?”
and:
“Is there anything else your company needs to review or inspect before determining that it will insure this property?”
The distinction matters even more because the buyer’s contractual protection has a deadline.
The Clock Matters
The standard St. Louis contract gives the buyer an Insurability Period of 10 days unless another number is inserted.
If the buyer cannot obtain homeowner/hazard insurance and wants to exercise the contingency, Paragraph 10a requires written notice from an insurance company of that inability within the Insurability Period.
If that doesn’t happen, the contract says the insurability condition is deemed waived and the buyer’s performance is no longer conditioned upon obtaining insurance.
That makes timing important, particularly if the insurer needs additional information or wants to inspect the property.
Exactly what constitutes an inability to obtain insurance in a particular transaction can become a legal question, especially when underwriting remains pending or an insurer requires something to be addressed before providing coverage. Buyers and their agents have good reason to find out where the insurance process stands before the deadline rather than at it.
A buyer can waive a property inspection. A buyer can accept an old roof. A buyer can decide that an outdated electrical system doesn’t bother them.
But those decisions don’t answer the insurance company’s question.
Before the Insurability Period expires, there is one more question worth asking:
“Is there anything else your company needs to review or inspect before determining that it will insure this property?”
Karen Moeller
STLKaren.com
Karen.McNeill@STLRE.com
314.678.7866
About the Author:
Karen Moeller is a St. Louis area REALTOR® with MORE, REALTORS® and a regular contributor to St. Louis Real Estate News, helping clients make informed, data-driven decisions.
