Home Inspector Insurance
Why Lawsuits Against Home Inspectors are High
As a home inspector, even if you do your best to provide an accurate report to the homeowner, sometimes mistakes happen or the homeowner believes a mistake was made. The risk for litigation against home inspectors is high, especially for inspectors that get leads from realtors.
In the recent past, thousands of homeowners brought lawsuits forward for "soft inspections" done by home inspectors who they claim are biased toward selling the house, on behalf of the realtor who got them the lead. One New Jersey couple sued the Housemaster or America, Inc. company for consumer fraud after the home they had inspected and later purchased actually had a leaky roof, bad wiring, and unstable flooring, and that cased settled for $37,000. Because the 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 ruin your business.
The Facts About Home Inspectors
- 63% of home inspectors are sole proprietors
- 57% do not have any non-inspector staff working for them
- 43% of home inspectors can benefit from business owners insurance
General Liability Insurance for Home Inspectors
General liability is the most fundamental policy that all business owners and entrepreneurs need. This 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 are protected against risks, you will need a general liability policy. This type of policy protects you in the event that you cause bodily injury or property damage in the course of 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 the limits of your policy. Be sure to talk with a knowledgeable agent about the appropriate liability limits for your business.
Do I Need Business Owners Insurance?
Many home inspectors can benefit from a business owners insurance policy, or BOP, which combines some important coverages in an 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, which protects you against injury and property damage claims, provides the foundation for your business owners policy.
- Property insurance: This includes damage to any property you own or lease, such as office buildings, storage facilities, warehouses and garages. You can typically add a tools and equipment floater to cover specialized tools.
- Business income: This will cover you if you have a business interruption that is covered by your policy. You will receive lost income and operating expenses for up to one year.
- Equipment breakdown: This covers the breakdown or malfunction of your equipment due to causes such as power surges.
- Personal and advertising injury: This protects you in the event that your advertising injures another person's reputation or causes a loss.
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 seperately. You may qualify to carry a smaller set of coverage plans, such as general liability and errors and omission insurance, if you have no employees other than yourself and do not run your business out of an office space.
Errors and Omissions Insurance for Home Inspectors
Unfortunately, we live in a litigious world, and whether you are at fault or not, you can find yourself at the wrong end of a lawsuit. Home inspectors are in a precarious position. Home buyers may assume you will discover every minor defect in a home they are buying, and may hold you accountable for overlooked problems.
That's why you need a strong errors and omissions or "E & O" insurance policy designed for home inspectors. You will 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 or errors.
Is Workers Compensation Necessary?
Do you have employees? If so, workers compensation insurance is almost always required by law. Laws vary, so check with a Trusted Choice member agent to get clarification on the regulations in your state. Workers compensation covers your employees for work-related injury, illness or death, including lost wages.
If you do not employ anyone other than yourself, you may not have to carry this coverage. Again, check your state laws to make sure. If you do not have workers compensation, you will not be covered in the event of an injury or sickness caused by 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. Most personal auto policies do not cover cars or trucks used for business purposes.
In addition to commercial vehicle coverage, consider carrying an equipment floater policy if you store and transport your tools in your car or truck. Many times the commercial vehicle coverage will not protect these if they are damaged in an accident or stolen from your truck.
Comparing Quotes on Home Inspection Insurance
We all make mistakes, and in extreme circumstances, these can have dire financial consequences. It just makes sense to protect your business with home inspector insurance. Whether you are a one-man operation or a multi-employee firm, you may need one or more commercial insurance policies to protect your business investment.
It's in your best interest to compare home inspector insurance policies and quotes before you buy. Even just three quotes for similar coverage can give you some insight into the range of costs you'll find in the market, and give you some peace of mind that you're getting the right insurance coverage for your needs and budget. Work with a knowledgeable agent and a reputable company; agency reputations can be quickly researched through AM Best and other rating agencies online.
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