Home inspections are no joking matter. A house is the biggest financial investment of people's lives and the one they're most likely to sue over.
If a home inspector lowballs a home’s value and the property burns down afterward, the owner will not have enough to cover the loss, and you can bet that your business will be staring in the ugly face of an angry lawsuit.
That's why it's so important to know about the different types of home inspector insurance available. An independent insurance agent is here to eliminate the hassle of searching on your own by walking you through a handpicked selection of top policies for you.
Why Do I Need Home Inspectors Insurance?
In the recent past, thousands of homeowners brought lawsuits forward for "soft inspections" done by home inspectors. Their claims declared bias toward selling the house, on behalf of the realtor who got them the lead.
One New Jersey couple sued HouseMaster of America, Inc. for consumer fraud after the home they had inspected and later purchased actually had a leaky roof, bad wiring, and unstable flooring. That cased settled for $37,000.
Because a home is such a huge investment for consumers, as a home inspector, you can potentially face major liability if the results of your inspection aren't accurate. Home inspector insurance can give you protection from major financial losses that could otherwise ruin your business.
General Liability Insurance for Home Inspectors
The most fundamental policy that all business owners and entrepreneurs need is general liability insurance. This aspect of business insurance provides financial protection against claims of damage or injury resulting from services the business provides.
Mistakes sometimes happen when you inspect a home. For example, you may inadvertently smash a window when you are putting a ladder against the side of a house.
To make sure you’re protected against risks like this and others, you’ll need a general liability policy. This type of policy protects you if you cause some sort of bodily injury or property damage while performing inspections.
This coverage pays for the costs of third-party medical care or property repair. It will also cover your legal defense and will pay claims or judgement up to your policy limits. Be sure to talk with an independent insurance agent about the liability limits that are appropriate for your business.
Do I Need Business Owners Insurance?
Many home inspectors can benefit from a business owners insurance policy, or BOP, which combines a number of important coverages into a simple, affordable insurance package. BOPs are designed for small businesses who earn less than $5 million a year and have fewer than 100 employees.
Home inspection firms who employ multiple home inspectors and other employees need to consider a BOP, potentially with additional coverage to fully protect their business assets.
This policy typically offers you the following coverages:
- General liability: This coverage protects you against injury and property damage claims and provides the foundation for your business owners policy.
- Property insurance: This includes damage to any property you own or lease, like office buildings, storage facilities, warehouses, and garages. You can typically add a tools and equipment floater to cover specialized tools, as well.
- Business income: This will cover you if you have a business interruption that is covered by your policy. You’ll receive lost income and operating expenses for up to one year.
- Equipment breakdown: This covers the breakdown or malfunction of certain equipment due to causes like power surges.
- Personal and advertising injury: This protects you if your advertising injures another person's reputation or causes a loss of some sort.
These coverages are normally bundled with an errors and omissions policy. This bundle can be purchased at a discounted rate — as opposed to purchasing each coverage separately.
You may qualify to carry a smaller set of coverage plans, like general liability and errors and omission insurance, if you have no employees other than yourself and don’t run your business out of an office space.
Errors and Omissions Insurance for Home Inspectors
Unfortunately, we live in a lawsuit-happy society, and whether you are at fault or not, you can find yourself at the wrong end of a lawsuit after even the slightest mistake. Home inspectors are in a tricky position.
Homebuyers may assume you’ll discover every minor defect in a home they’re buying, and may hold you accountable if something’s overlooked.
That's why you need a strong errors and omissions or "E & O" insurance policy designed for home inspectors. You’ll be protected if you unknowingly make an error while inspecting a home or commercial property. You can also receive legal defense if a homeowner brings a lawsuit against you.
You can usually find coverage related to the following inspections and testing:
- Septic and sewer
- Lead paint
- Water purification
- Spa and pool
Plus, added coverage if applicable:
- Real estate agent referrals protection
- Franchisee protection
Keep in mind that errors and omissions does not cover you for intentional acts and errors.
Do I Need Workers' Compensation?
Do you have employees? If so, workers' compensation insurance is almost always required by law. Laws vary, so check with your independent insurance agent to get clarification on the necessary regulations in your state. Workers' compensation covers your employees for work-related injury, illness or death, including lost wages.
If you don’t have any employees besides yourself, you may not have to carry this coverage. Again, check your state laws to make sure.
If you don’t have workers' compensation, you won’t be covered if an employee gets injured or sick from a job-related incident.
Coverage for Your Vehicle and Equipment
Commercial vehicle insurance is almost always necessary in a business like home inspection, as you are regularly traveling from one job site to another. It’s necessary for two reasons.
First, to cover any business-owned vehicles. And second, for exposures arising from hired or non-owned vehicles (which protects vehicles owned by employees that are used for business purposes).
In addition to commercial vehicle coverage, consider carrying an equipment floater policy if you store and transport tools in your car or truck. Many times the commercial vehicle coverage will not protect these if they’re damaged in an accident or stolen from your truck.
Finding and Comparing Home Inspector Insurance Quotes
An independent insurance agent will review your needs and help you evaluate which type of home inspector insurance makes the most sense for your business.
They'll also compare policies and quotes from multiple insurance companies to make sure you have the best protection out there.
Benefits of an Independent Insurance Agent?
Insurance policies are complicated, and searching through them can be confusing, time-consuming, frustrating or downright boring. An independent agent's role is to simplify the process.
Independent insurance agents have access to multiple insurance companies, ultimately finding you the best coverage, accessibility and competitive pricing while working for you. Find an independent insurance agent in your community here.