Professional Liability Insurance for a Property Inspector

Running a property inspection business is challenging enough without having to worry about lawsuits, employee injuries or property damage. Having the right home inspectors insurance allows you to put all that out of your mind and focus on the critical task of running your business.

Why Do You Need Property Inspection Insurance?

As a property inspector, homeowners and homebuyers rely on you to provide feedback on the quality of a home and point out any issues there may be with it. Oftentimes, an interested homebuyer, or the homebuyer’s lender, may request an inspection before agreeing to purchase a given home.

Since buying a home can be one of the most important, and costly, tasks that anyone can do in their lives, your job as a property inspector is critical. What happens, then, when you make a mistake? Or the client fails to read your report thoroughly, and then someone gets hurt or the homeowner loses money?

Regardless of what the legal jargon may say in your contract, you can still be held liable, which is why you should have property inspection insurance in place long before you sign any contract with a client.

There are several areas in which home inspectors insurance can help protect you as a property inspector:

• Professional Services
• Property Damage
• Injury
• Contracts

Ultimately, what insurance for property inspectors gives you is peace of mind.

When you work hard for an honest day’s pay, the last thing you want is to wind up in the middle of a lawsuit because of an unforeseen incident. If you don’t have the right insurance, a single such suit could jeopardize your entire business.

Keep in mind that some states have certain insurance requirements for certain types of business owners, such as a sole proprietor, Limited Liability Company (LLC), or corporation.

Business Structure: Sole Proprietor vs. LLC Property Inspector

Being a sole proprietor property inspector offers many advantages, like independence and flexible work hours. One disadvantage it has, however, is that you are personally on the hook for any liability that may arise from your operations.

While structuring your business as an LLC may be a bit more costly up front, the value it offers as distinct from a sole proprietorship is that the LLC structure separates your personal assets from your business assets.

In summary, if your business becomes liable for any damages or penalties, only your business assets can be taken to cover costs you can’t meet otherwise. Your personal assets, however, remain safe.

In a different way, however, an LLC has more potential risks than a sole proprietorship. As your property inspection business grows under the LLC structure, it may need to start hiring employees.

Being an employer can create more potential problems and will, thus, require additional insurance policies to cover their unique exposures. Insurance needs and requirements are an important consideration when choosing your company’s business structure.

Property Inspectors and General Liability Insurance

General liability insurance for home inspectors is essential coverage, as accidents and oversights can happen to anyone. The general liability home inspection insurance cost is typically reasonable, as the number of claims is usually small. It usually costs about $500 a year for coverage. In terms of the question, what does general liability insurance cover, it covers:

1. Bodily Injury
2. Property Damage

Note any exclusions in a policy before you commit to it, as it may not cover certain types of damage, including bodily injury.

Both sole proprietors and LLCs should have general liability insurance, and may even be required by law to do so in certain states.

Property Inspectors and Errors and Omissions Insurance

Distinct from small general liability claims, errors and omissions insurance (E&O) claims tend to be larger, as they involve mistakes or omissions you’ve made in a contract that has led to a client’s financial hardship. So even though E&O policies can cost more than general liability policies, the errors and omissions insurance cost for property inspectors can be significantly less than the cost of losing just a single court case. You can expect to pay between $600-$1,200 per year for this type of coverage.

Without proper and sufficient E&O insurance, aka professional liability coverage for property inspectors may not be enough, leaving you exposed to a potentially devastating lawsuit. Even if you’re found not at fault, court costs and lawyer fees could be a debilitating or, even, detrimental expense.

Errors and omissions insurance will cover these types of defense costs whether or not you're found at fault, as well as any claim the plaintiff is awarded if you are found at fault.

Other key protections E&O insurance offers include:

Breach of contract claims.

• Claims of failure to properly disclose findings and suggest proper repairs.
• Negligence claims.
• Claims calling your building-inspection expertise into question.

Since sole proprietors have all their personal assets on the line in addition to their business assets if they get sued, professional liability insurance is essential to prevent a disastrous possibility.

Property Inspectors and Business Owners Insurance

Known as a BOP for short, a business owners policy offers business owners a way to save money on insurance by packaging together general liability and property coverage.

It also includes business income coverage, which will provide you with your normal operating expenses should you be unable to work due to a covered peril.

If your business owns a building, a BOP will also cover it and any business personal property.

Other Types of Insurance a Property Inspector Needs

All property inspectors, and sole proprietor property inspectors in particular, would be wise to consider any or all of these additional types of insurance to fully protect themselves and their business:

• Professional Liability
• Commercial Auto
• Cyber Liability
• Commercial Umbrella
• Workers' Compensation

Is Property Inspector Insurance Required in All States?

It is important to note the requirements of your state when it comes to insurance. Property inspectors are required to have insurance in almost half of the United States. Even if it is not required in your state, you should protect your wallet and future profits anyway.

Additionally, many clients and even realtors will be quicker to use your services if they know you are responsible enough to have the proper insurance protection.

Additional Questions to 3 Questions to Ask as a Property Inspector

1. Is property inspector insurance worth the money?

Absolutely. If you can imagine the tens of thousands of dollars you would need just to defend yourself in court, it is easy to see the value.

__2. What is included and excluded? __

Make sure to read the policies that you decide to purchase. You don't want to assume everything is covered.

3. Will it pay for the client to live elsewhere while the repairs are being done?

Check your policy for this essential coverage as well.

Where to Get Business Insurance for Property Inspectors

CoverWallet's intelligent assessment system will identify the insurance you need based on your specific business structure, get you a policy that fits your budget, and do it all in less time than you think. Contact CoverWallet now to discuss the property inspectors insurance options best for you and your business.