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There are a lot of benefits to being a sole proprietor home inspector, like independence and flexible work hours. But before you get started, you need to invest in the right business insurance.
Sole Proprietor insurance is a necessity to protect your home inspection business from risks such as a slip-and-fall accident, or damage to your client’s home. In the event of an accident, insurance will make sure your business can keep running. Keep reading to learn more about the benefits of Sole Proprietor insurance for home inspectors and what it covers.
When you started your business as a home inspector you probably compared the different entity types to try to decide what would be best for you and your business. The most affordable way to get started is, of course, a sole proprietorship. This type of business entity is also good if you decide not to have employees. The downside to being a sole proprietor, besides having to do all of the work yourself, is that you are personally on the hook for any liability that can arise from your operations. The good news is there are plenty of insurance options for you so that you can help to mitigate the risks.
A bit more of an expensive way to start your business is to become an LLC or limited liability company. The pros of an LLC include separating liability from your assets as well as more tax benefits. An LLC may have more risks though because usually, an LLC will be a growing business which means hiring employees. Employees can create more problems for a business owner and sometimes may not be the best option depending on what your future goals are. An LLC will need more insurance policies to cover their unique exposures which means more money out of your pocket. It is important to determine what your goals are when choosing if you want to be a sole proprietor or a limited liability company.
There are several reasons why sole proprietors need Home Inspectors insurance to protect themselves.
Besides all of these critical reasons, a home inspector should have insurance because it will give you peace of mind. When you are a hard worker you want to be able to enjoy your passion and reap the rewards. If you end up in the middle of a lawsuit because of an unforeseen incident, you could jeopardize your entire business if you don’t have the right insurance. Also, be sure to check with your state. Some states will have certain insurance requirements for business owners, whether a sole proprietor, LLC, or corporation.
Errors & Omissions insurance, also known as E&O or Professional Liability, may arguably be the most important insurance policy a home inspector purchases. Since you offer a professional service, people are depending on your knowledge and expertise to deliver quality work. If you make a mistake by error or omission, the customer may sue you.
Let’s say you complete an inspection for a homeowner and all looks good, but for some reason, you missed that there was a roof leak. The roof leak ends up causing mold damage in the home and the customer sues you for not having this information in your report. If it is proven that you missed it, you could be on the hook for the damages. Even if you are not at fault, you will have to defend yourself in court which can cost a ton of money. The defense costs will be paid for by your E&O policy.
A Professional Liability insurance policy, while maybe the most essential coverage for a sole proprietor home inspector, is not the only insurance policy that you will need to be fully protected. Please also consider the following insurance policies, if they apply to your unique business operations.
As a sole proprietor home inspector, it is even more important that you have the proper insurance in place. You are your business and only depend on yourself, so that may reduce your risk somewhat, but it does not eliminate it. Again, make sure to check with the state where you do business and read all the contracts that you sign. Make your customers feel confident doing business with you by showing them you have the best protection.
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