Insurance for Home Inspectors

Many states require home inspectors to carry certain types of coverage and minimum limits for liability. An insurance is designed to protect you from unintended circumstances that result in losses, or hardship of your clients and your business.

Most home inspectors do carry insurance and often work with an experienced agent to develop an insurance portfolio in an attempt to cover the vast exposure to risk that this necessary industry has. While the most common insurance talked about in the industry is General Liability, that will only provide coverage for bodily injury and property damage to third parties. Think slips and falls or damaging a neighbors car while attempting to inspect a roof. When you are in the business of performing building inspection services, you are providing an opinion based on your expertise and training. This is where Professional Liability comes in. Not only do you have to worry about the physical implications of unforeseen incidents with your business, but you must also be aware that if you accidentally make a mistake, or are negligent, and it causes a financial loss to your customer you will be held liable.

American Society of Home Inspectors (ASHI) certified is the highest level of certification a home inspector business can receive. These are the only true 3rd-party certified inspectors in the industry, and are accredited by the National Commission for Certifying Agencies (NCCA).

Yes. Even though there are instances where home inspectors can be exempted from Workers' Compensation, there are claims and liabilities in which health insurance does not provide coverage. As soon as your business adds employees, workers compensation becomes mandatory or highly recommended.

As a business owner with employees, though, it is your job to make sure that they feel safe and work and are protected. One easy way to accomplish this is by having Workers Compensation insurance for them because if they get hurt on the job and cannot work, they will be unable to support their family without it. Additionally, medical bills can bankrupt even the richest person, so having the help to pay for their medical expenses if they become ill or hurt due to a work-related incident could be a great incentive for them to work hard. If an employee gets hurt and can prove that you were negligent, the Employers’ Liability coverage part of Workers Compensation will pay for the defense and settlement. This is not to be confused with Professional Liability which will pay for your negligence and errors and omissions that are related to your profession.

The cost of insurance can vary by state and number of inspectations made per year. General Liability insurance is often about $500 a year. The cost for Professional Liability varies much more, depending on the extent of inspection services. For a basic E&O policy which does not cover work around hazardous materials, the cost can range from $600-$1,200 per year. For inspectors testing Radon, mold, asbestos, and other hazardous materials the cost can often starts at $2,000 per year.

Home inspectors work closely with buyers in the process of purchasing a new home. They count on you to thoroughly inspect a home, identify any potential problems, and deliver the findings. Buyers rely on your recommendations to determine if they should continue with the purchase. If you miss something critical, it can result in a lawsuit months after the home inspection is complete. Home inspector insurance is beneficial because it protects you during these costly scenarios.

There are many risks you face each day that result in a lawsuit or unwanted expenses to your home inspection business including:

• Property Damage: It’s common for home inspectors to move items during an inspection or use heavy equipment. If your ladder crashes and breaks the glass on a homeowner’s cabinet or you flood the bathroom during a routine water inspection, you’ll be held responsible for the damages.
• Oversights: It’s hard to document every finding without going overboard. If you fail to notice certain pests or potential mold and the buyer ends up with a significant bill, as a result, later, they can file a lawsuit for negligence.
• Auto Accidents: It’s impossible to complete a home inspection anywhere but at the home. If you use your personal vehicle to travel to job sites and cause an accident, your personal auto policy may not cover the expenses.
• Damaged Equipment: Specialized tools make it possible to complete home inspections efficiently. If these tools are stolen, broken, or damaged, expenses to replace them can add up in addition to lost revenue while they are unusable.

As a home inspector, you may think you only need Errors and Omissions insurance since that covers your inspection operations. What about those times that something unintentional happens that isn’t really related to inspecting homes? For example, if you are going to climb on a roof to inspect it and need to use a ladder. You lean the ladder up against the home and upon climbing on to the roof, the ladder is not secure and falls over hitting the neighbors’ car. This type of incident would be covered with General Liability insurance under the property damage coverage part. Unfortunately, there are all kinds of freak accidents like this that can happen, no matter how careful you are.

Additionally, you should have General Liability if you have an office that your clients come to. This even applies to delivery people. Because, if a third-party walks on to your premises and becomes injured you will be held liable. People can slip and fall and severely injure themselves. While most of the time it may be a sprained ankle which is minimal, there are times that it can be even more severe which could cost you tens of thousands of dollars without General Liability insurance.