Building inspectors evaluate all aspects of a building’s structure and component systems and report on the physical condition of the property for their clients – including homebuyers, homeowners, commercial building buyers and other parties involved in building construction and real estate transactions. This category also includes building inspection bureaus and home inspectors.
Physical risks to individuals and property are always present as a building inspector evaluates a property. In addition, because a building inspector’s report may influence the success of a pending real estate transaction, even a small error can have huge consequences for the interested parties – and ultimately for the building inspector.
Whether you are sole proprietor or a large inspection company owner with employees, you need a variety of business insurance policies that protect you, your employees and your business assets from the risks you face.
Building inspectors face multiple hazards and risks in the course of inspecting a building. Your building inspector insurance should address these risks:
- Causing physical damage to someone else’s property
- Causing injury to someone else
- Causing injury to yourself or injury to an employee or contractor
- Making errors in property valuation that cause a financial loss for the buyer, seller or lending institution
- Being involved in a car accident while driving for business
Types of Building Inspector Insurance
Building inspectors need a variety of business insurance policies to protect them from the costs of accidents, injuries and errors. In addition, many states require certain types of coverage or mandate minimum liability insurance limits. The specific types of policies and coverage you need depend on the number of employees you have and the number of independent contractors you use.
An independent insurance agent in the Trusted Choice network can help you find the right policies for your unique needs.
You will need to consider the following types building inspector insurance policies:
- Commercial general liability (CGL): This policy covers the costs associated with a legal defense and judgments rendered against you if you, your products, services or employees cause third-party bodily injury or property damage (for example, your ladder smashes through a window of the property you are inspecting). CGL insurance also covers costs related to claims of libel, slander and advertising liability. A CGL policy likely will not provide coverage for errors and omissions in the performance of a building inspection.
- Professional liability/errors and omissions (E&O) insurance: Building inspector E&O insurance offers coverage for lawsuits related to negligent professional services or failing to perform professional duties. This type of coverage is recommended for building inspectors and is described in greater detail below.
- Workers’ compensation insurance: Workers’ compensation insurance provides income replacement and medical benefits to employees who sustain a work-related illness or injury. State workers’ compensation laws vary, but most employers are required to purchase workers’ compensation insurance. You can also purchase workers’ compensation coverage for yourself if you are a contractor or sole proprietor (state laws vary).
- Commercial vehicle insurance: Business auto insurance is the equivalent of your personal auto insurance policy, but it protects vehicles and drivers associated with your business. If your business owns vehicles, this policy will insure your business for costs associated with collisions or other vehicle damage as well as providing liability protection for your business if one of your drivers is at fault for an accident. Imagine you or an employee drives over a child in a homeowner’s driveway during a home inspection. You need commercial auto insurance to provide coverage for this incident.
Building Inspector Errors & Omissions Insurance
Errors and omissions (E&O) insurance – or professional liability insurance – protects professionals, their partners, their employees, and the partnership or corporation from damage caused by failing to provide professional services. As the definition of “professional” broadens and our society becomes more litigious, an increasing number of businesses are becoming exposed to E&O lawsuits or claims. As a building inspector, you are very susceptible to professional liability claims.
Businesses that provide professional services can be sued based on their erroneous advice or service, negligence, or omissions that cause a client to lose money. Building inspectors provide a valuable service to individuals or entities looking to engage in real estate transactions. Failure to disclose building defects can lead to financial harm to one of the interested parties. E&O insurance is the way to protect yourself if you are sued.
Your CGL policy likely will not cover you for lawsuits related to the professional services you provide. While a CGL policy provides broad protection for bodily injury and property damage claims, it will not protect you if you are sued for any of the following:
- Claims of professional negligence
- Claims of breach of contract
- Claims of failure to provide proper recommendations about your findings
- Claims in which the performance of your building inspection is questioned
Let’s say that you fail to detect and report structural defects on the roof of a building that you have been contracted to inspect. If your client then sustains financial losses due to your negligent error or omission, you can be sued for damages. If your CGL policy excludes coverage for professional services, you will have no recourse and no means of paying for your defense, let alone any settlements or judgments that you are required to pay.
The only way to protect your business in these situations is with building inspector errors and omissions insurance.
Because of the wide variation in the types of businesses or professions that need E&O coverage, there is neither standard policy language nor a one-size-fits-all solution. Every type of professional or professional services firm has unique exposures, and their E&O policies should reflect that. E&O coverage can be purchased for building inspectors who work at a larger firm or for individual appraisers who act as contractors or sole proprietors. You must work closely with your independent insurance agent to make sure your policy fits your needs and addresses your unique exposures.
Keep in mind that a professional liability policy does cover you for criminal, fraudulent or malicious acts; bodily injury or property damage; workers’ compensation claims; punitive damages; automobile liability; property claims; and any other general liability issues. Your policy’s exclusions will specifically reflect your professional liability risks.
What Is Hired and Nonowned Auto Liability Coverage?
Business auto coverage might not be a cut-and-dried issue for many building inspectors. Are you a sole proprietor who uses your personal vehicle for work? Do you have employees or use independent contractors that use their personal vehicles for business purposes? If your business does not own any vehicles but you or others use personal vehicles in the course of doing business, you need hired and nonowned auto liability coverage.
If you or one of your employees causes a car accident while working, the business can be held liable for bodily injury or property damage that occurs – even if the driver has personal auto coverage. Why? Some insurance companies exclude business use from personal auto coverage; otherwise, a claim may exceed the limits of the driver’s personal auto policy. Either way, the business needs coverage, too.
Hired or nonowned auto liability insurance protects your company if you are sued as a result of an automobile accident that you or your employee has in a personal vehicle while on company business. It covers bodily injury and property damage caused by a nonowned vehicle that is being used to perform activities for your business.
You can add nonowned auto liability coverage to your business auto policy. If you do not have a business auto policy (because your company does not own any vehicles), you can usually add nonowned auto liability coverage to your general liability policy.
Where to Find Quotes for Building Inspector Insurance
Some insurance companies offer bundled policies for building inspectors, with several types of coverage bundled into a convenient building inspector insurance package. Whether you need a package policy or a variety of individual policies, you need tailored coverage that addresses your individual exposures.
Contact an independent insurance agent in the Trusted Choice network who will learn about your business and obtain quotes from multiple highly rated insurance companies. An independent agent is not tied to any one insurance company. With the ability to obtain multiple quotes, your agent can find the insurance company, coverage and price that is best suited for you.