Home Inspection Insurance Policy Information

Home Inspection Insurance. If you are a home inspector, you may not realize that you are at risk for litigation from unhappy clients. You do what you can to provide the best possible inspection results to your clients, but no one is free from the potential to be sued.

Home inspectors provide non-invasive dwelling inspections to identify deficiencies. An acceptable inspection is often a final condition of a home purchase and may be requested by the lender, the real estate agent, or the prospective buyer.

Insurers may also request an inspection. After the inspection is completed, a report is prepared for the client with details and recommendations for remediation or correction.

The inspector does not warrant the work or offer advice on the purchase of the home. The inspection is visual only. The inspector is not required to enter closed areas, walk on the roof, or enter an attic or a crawl space.

Regulation of inspectors, certification and educational requirements vary by state. Three major associations encourage professional ethics and standards of practice. Inspectors can belong to one or more of these associations.

Mistakes happen, and human errors are made. If a homeowner believes that you have made a mistake, then it is possible for you to be sued. This is why home inspection insurance is so important. Home inspectors run a high risk for being involved in litigation, particularly when realtors are handling requests for clients based on realtor leads.

Home inspection insurance protects your business from lawsuits with rates as low as $37/mo. Get a fast quote and your certificate of insurance now.

Below are some answers to commonly asked home inspectors insurance questions:

What Is Home Inspection Insurance?
How Much Does Home Inspection Insurance Cost?
Why Home Inspectors Need Insurance?
What Type Of Insurance Do Home Inspection Businesses Need?
What Does Home Inspection Insurance Cover & Pay For?

What Is Home Inspection Insurance?

Home inspection insurance is a type of insurance that covers home inspectors for any damages or mistakes they may make during the inspection process.

This insurance helps protect the home inspector from financial loss in case a client sues them for any errors or omissions in their inspection report. Home inspection insurance typically covers legal expenses, court costs, and any compensation owed to the client if a claim is made.

This insurance is important for home inspectors, as it provides them with peace of mind and protection against any potential financial losses.

How Much Does Home Inspection Insurance Cost?

The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small home inspectors ranges from $37 to $49 per month based on location, size, revenue and more.

Why Do Home Inspectors Need Insurance?

Home inspectors usually operate as sole proprietors; 63 percent of inspectors work for themselves. Around 57 percent of inspectors have no non-inspector staff that work with them. When you are a sole proprietor, any claims that are launched against you end up being your responsibility.

If an award is given to the claimant, it's up to you to pay it. You must also pay your own legal costs.

In the past, there have been thousands of lawsuits against home inspectors for so-called soft inspections. In these inspections, the claim usually alleges that the inspector is biased toward selling the house on the behalf of the lead-generating realtor, so they doubt the accuracy of the inspection's findings.

In New Jersey, a couple brought suit against Housemaster of America, Inc., accusing the company of consumer fraud after they purchased a home that the company had inspected only to find that the home had bad wiring, flooring problems, and a leaky roof. The couple was awarded $37K.

Since a home is one of the biggest purchases that most people will ever make, home inspectors can be subject to major liability if their inspection results are less than accurate. With home inspection insurance for your home inspection business, you can enjoy protection from major financial loss that might otherwise leave your business in ruins.

What Type Of Insurance Do Home Inspection Businesses Need?

Do You Need General Liaiblity Insurance?

All entrepreneurs and small business owners need general liability insurance. This type of insurance gives your business financial protection for claims of injury or damage that results from the service that you provide to clients.

Errors occur when inspecting a home; everyone is subject to human error, regardless of how well-prepared and trained you are. For instance, it is possible that when you place a ladder on the side of a client's home, you may accidentally cause a window to break.

To ensure that you have protection, you need liability insurance to cover all the potential scenarios and the damage that these scenarios can cause. In performing inspections, unintended property damage and claims of bodily injury are not uncommon, so mitigating that risk with liability insurance makes a lot of sense.

This type of insurance pays out for the cost of any property repair and third-party medical costs. In addition, it covers the cost of hiring an attorney to represent you in defense of your actions, and it can pay awards and judgments ultimately ruled against you up to the limits that you select in the policy.

Speak with a knowledgeable agent to find out how much home inspection insurance you need to be fully protected.

Do You Need Professional Liaiblity Insurance?

Home inspector's professional liability, aka errors and omissions, offers coverage for claims against a home inspector for errors, omissions, negligence, and failure to identify defects. The policy covers both legal fees and any judgment or settlement that occurs.

Do You Need Business Owners Insurance (BOP)?

It is oftentimes the case that home inspectors need business owners insurance, which is known by the acronym BOP. This type of home inspection insurance combines the most important coverages into one larger policy.

A BOP policy is a good choice for the smallest businesses - those with revenues of less than $5 million and less than 100 people on staff. It is also a good option for firms where there are multiple employees and several home inspectors, since these businesses often need additional coverage to ensure business assets are fully protected.

With a BOP policy, your home inspector business generally enjoys:

General liability insurance. General liability insurance that protects the business against claims of property damage or personal injury. This is the foundation of the BOP policy.
Property insurance. If damage occurs to property that you lease or own, including your office building, warehouse, garage, or storage facility, property insurance kicks in and pays for replacement of tools and other items or structures.
Business income insurance. If your home inspector business is interrupted, this policy covers lost income and provides for operating expenses for a particular period of time, usually a year.
Errors and Omissions insurance. Also called Professional insurance. An E&O policy protects you against mistakes you make in crafting inspection reports. It also provides for your legal defense in defending yourself against claims of errors or omissions that result in litigation, such as claims related to testing and inspecting for septic and sew, radon, lead paint, or mold inspections.
Business auto insurance. This is an essential insurance for vehicles used in the course of carrying out business activities.

Work with a licensed agent to find out how to protect your home inspection business from liability. A seasoned agent can help you find the best quote for the level of home inspection insurance you need based on your risks and individual needs. Agents can also help you compare quotes with multiple insurers to find the right fit for your business.

Home Inspector's Risks & Exposures

Premises liability exposures are limited at the firm's office due to lack of public access. Off-premises exposures are at the sites of homes being inspected. Hazards include property damage, theft and perhaps invasion of privacy. There must be training, guidelines, and procedures concerning appropriate off-site behavior. Customer complaints should be dealt with promptly and decisively.

Professional liability exposures are generally light as the contracts for home inspection services stipulate that inspections and reports are not warranties and are based on visual inspection only. Inappropriate and undisclosed business relationships with real estate agents could lead to allegations of impropriety and nonobjective findings.

Workers compensation exposures arise from office operations and site work at customers' premises. Work done in the office is done on computers. Potential injuries include eyestrain, neck strain, carpal tunnel syndrome, and similar cumulative trauma injuries that can be reduced with ergonomically designed workstations. Travel may be extensive.

Off-site exposures may include climbing on ladders or working on uneven terrain in unfamiliar environments. Trips and falls are common. The inspector may be attacked by unrestrained animals while performing home inspections. Since inspectors often work alone, injuries may go unnoticed, which can lead to delayed response and delayed first aid. Inspectors may be injured in vehicle accidents.

Property exposures are generally limited to those of an office, although there may be some incidental storage or an area for meetings. Ignition sources include wiring, heating and air conditioning systems, wear, and overheating of equipment. Storage of paper should be in fireproof cabinets.

Crime exposures are from employee dishonesty, including theft of property from the clients' homes. If cash payments are accepted, there is a money and securities exposure. Hazards increase without proper background checks and monitoring procedures. All ordering, billing, and disbursement should be separate duties with regular audits taking place.

Inland marine exposures are from accounts receivable if the inspector bills real estate agencies, computers, special floater, and valuable papers and records for contracts and clients' information. Inspectors' primary equipment consists of a camera, clipboard, and measuring wheel, but may include ladders, flashlights, and specialized testing equipment, such as radon detectors, taken to inspection sites. Some may also carry their computers with them to record their observations and findings as they walk through the property.

Business auto exposures are moderate as inspectors travel to inspection locations. These are usually vans or pickups that can transport the inspector's equipment. If vehicles are provided to employees, there should be written guidelines regarding the personal and permitted use of the vehicle. All drivers must have appropriate licenses and acceptable MVRs. Vehicles must be maintained, and records kept in a central location.

What Does Home Inspection Insurance Cover & Pay For?

Home inspectors may be sued for a variety of reasons, including negligence, errors and omissions, breach of contract, and misrepresentation. Insurance policies can help protect home inspectors from these lawsuits by covering legal fees, settlements, and judgments. Some examples of how insurance can help pay for these lawsuits include:

Negligence: If a home inspector fails to identify a major issue during the inspection and the client suffers financial loss as a result, they may be sued for negligence. Professional liability insurance, also known as errors and omissions (E&O) insurance, can help cover legal expenses, settlements, or judgments related to the claim.

Errors and omissions: Home inspectors may be sued for errors made during the inspection process or for failing to report a defect. E&O insurance can help protect inspectors from the financial consequences of such claims by covering defense costs, settlements, and judgments.

Breach of contract: If a client believes that the home inspector failed to fulfill the terms of their contract, they may sue for breach of contract. General liability insurance can help cover the legal fees, settlements, and judgments related to the claim.

Misrepresentation: If a home inspector is accused of intentionally misrepresenting the condition of a property, they may be sued for fraud or misrepresentation. E&O insurance can help protect the inspector by covering the legal expenses, settlements, and judgments associated with the claim.

Personal injury: If a client or third party is injured during the inspection process, they may sue the home inspector for damages. General liability insurance can help cover the costs of medical expenses, legal fees, settlements, and judgments related to the injury claim.

Property damage: If a home inspector accidentally causes damage to the property during the inspection, they may be sued for property damage. General liability insurance can help cover the costs of repair or replacement, as well as any legal expenses, settlements, or judgments related to the claim.

To maximize protection, home inspectors should consider obtaining both general liability insurance and E&O insurance. These policies can be tailored to the specific needs and risks of the home inspection profession, ensuring comprehensive coverage in the event of a lawsuit.

Commercial Insurance And Business Industry Classification

SIC CODE: 7389 Business Services, Not Elsewhere Classified
NAICS CODE: 541350 Building Inspection Services
Suggested Workers Compensation Code(s): 8720 Inspection of Risks for Insurance or Valuation Purposes NOC, 8721 Real Estate Agency - Outside Employees & Collectors

7389: Business Services, Not Elsewhere Classified

Division I: Services | Major Group 73: Business Services | Industry Group 738: Miscellaneous Business Services

7389 Business Services, Not Elsewhere Classified: Establishments primarily engaged in furnishing business services, not elsewhere classified, such as bondspersons, drafting services, lecture bureaus, notaries public, sign painting, speakers' bureaus, water softening services, and auctioneering services, on a commission or fee basis. Auctions of used cars and agricultural commodities, such as livestock and produce, are classified in Wholesale Trade.

Agents and brokers for authors and nonperforming artist
Apparel pressing service for the trade
Appraisers, except real estate appraisers
Arbitration and conciliation services
Artists' agents and brokers, except performing artists
Auctioneering service on a commission or fee basis
Authors' agents and brokers
Automobile recovery service
Automobile repossession service
Automobile shows, flower shows, and home shows: promoters of
Bartering services for businesses
Batik work (handprinting on textiles)
Bondspersons
Bottle exchanges
Bronzing baby shoes
Business brokers (buying and selling business enterprises)
Charge account service (shopping plates) collection by individual
Check validation service
Cloth: cutting to length, bolting, or winding for textile distributors
Contractors' disbursement control
Convention bureaus
Convention decorators
Copyright protection service
Correct time service
Cosmetic kits, assembling and packaging
Cotton inspection service, not connected with transportation
Cotton sampler service
Coupon redemption service, except trading stamps
Credit card service (collection by individual firms)
Decoration service for special events
Demonstration service, separate from sale
Directories, telephone: distribution on a contract or fee basis
Divers, commercial
Drafting service, except temporary help
Drawback service, customs
Drive-a-way automobile service
Embroidering of advertising on shirts, etc.
Engrossing, e.g., diplomas and resolutions
Exhibits, building of: by industrial contractors
Field warehousing, not public warehousing
Filling pressure containers (aerosol) with hair spray, insecticides, etc.
Fire extinguishers, service of
Firefighting service, other than forestry or public
Flagging service (traffic control)
Floats, decoration of
Florists' telegraph service
Folding and refolding service: textile and apparel
Fundraising on a contract or fee basis
Gas systems, contract conversion from manufactured to natural gas
Handtool designers
Handwriting analysis
Hosiery pairing on a contract or fee basis
Hotel reservation service
Identification engraving service
Inspection of commodities, not connected with transportation
Interior decorating consulting service, except painters and paper
Interior designing service, except painters and paper hangers
Inventory computing service
Labeling bottles, cans, cartons, etc. for the trade: not printing
Laminating of photographs (coating photographs with plastics)
Lecture bureaus
Lettering service
Liquidators of merchandise on a contract or fee basis
Mannequin decorating service
Map drafting service
Mapmaking, including aerial
Message service, telephone answering except beeper service
Metal slitting and shearing on a contract or fee basis
Meter readers, remote
Microfilm recording and developing service
Mounting merchandise on cards on a contract or fee basis
Music distribution systems, except coin-operated
Notaries public
Packaging and labeling service (not packing and crating)
Paralegal service
Parcel packing service (packaging)
Patent brokers
Patrol of electric transmission or gas lines
Photogrammetric mapping service (not professional engineers)
Photographic library service, still
Photography brokers
Pipeline and power line inspection services
Playwrights' brokers
Post office contract stations
Presorting mail service
Press clipping service
Printed circuitry graphic layout
Process serving service
Produce weighing service, not connected with transportation
Product sterilization service
Promoters of home shows and flower shows
Racetrack cleaning, except buildings
Radio broadcasting music checkers
Radio transcription service
Recording studios on a contract or fee basis
Redemption of trading stamps
Repossession service
Restaurant reservation service
Rug binding for the trade
Safety inspection service, except automotive
Salvaging of damaged merchandise, not engaged in sales
Sampling of commodities, not connected with transportation
Scrap steel cutting on a contract or fee basis
Shoe designers
Showcard painting
Shrinking textiles for tailors and dressmakers
Sign painting and lettering shops
Solvents recovery service on a contract or fee basis
Speakers' bureaus
Sponging textiles for tailors and dressmakers
Styling of fashions, apparel, furniture, and textiles
Styling wigs for the trade
Swimming pool cleaning and maintenance
Switchboard operation of private branch exchanges
Tape slitting for the trade (cutting plastics, leather, etc. into widths)
Tax collection agencies: collecting for a city, county, or State
Tax title dealers: agencies for city, county, or State
Telemarketing (telephone marketing) service on a contract or fee basis
Telephone answering, except beeper service
Telephone solicitation service on a contract or fee basis
Textile designers
Textile folding and packing services
Time-share condominium exchanges
Tobacco sheeting service on a contract or fee basis
Tourist information bureaus
Trade show arrangement
Trading stamp promotion and sale to stores
Trading stamp redemption
Translation service
Water softener service
Weighing foods and other commodities not connected with
Welcoming service
Window trimming service
Yacht brokers

Home Inspection Insurance - The Bottom Line

To find out exactly what type of home inspection insurance you need and how much coverage you should have, speak to a licensed insurance agent to go over your options.

Additional Resources For Real Estate Insurance

Learn about small business real estate insurance coverages including liability and commercial property policies for realtors, mortgage companies and more.

The real estate industry involves a lot of investment, both in terms of finances and time. Therefore, it is important for real estate professionals to protect themselves and their assets with business insurance.

One major reason why the real estate industry needs commercial insurance is to protect against lawsuits. As a real estate professional, you may be sued for various reasons such as property damage, injury on the property, or even discrimination. Insurance can provide financial protection against these types of legal issues and help cover the costs of defending against a lawsuit.

Another reason why commercial insurance is important in the real estate industry is to protect against natural disasters. Homes and other properties can be damaged by natural disasters such as hurricanes, tornadoes, and earthquakes, which can lead to costly repairs. Insurance can provide financial assistance to cover these repair costs and help real estate professionals get back on their feet after a disaster.

Finally, insurance is important for the real estate industry because it can help protect against financial loss. For example, if a real estate investment goes sour or a property is not rented out as expected, insurance can provide financial assistance to help cover the losses.

Overall, the real estate industry needs business insurance to protect against legal issues, natural disasters, and financial loss. Without insurance, real estate professionals may face significant financial and legal risks that could impact their business and livelihood.

Minimum recommended small business insurance coverage: Business Personal Property, Business Income with Extra Expense, Employee Dishonesty, Money and Securities, Accounts Receivable, Computers, Valuable Papers and Records, General Liability, Employee Benefits Liability, Professional Liability, Umbrella Liability, Hired and Non-owned Auto Liability & Workers Compensation.

Other commercial insurance policies to consider: Building, Earthquake, Equipment Breakdown, Flood, Computer Fraud, Forgery, Cyber Liability, Employment-related Practices Liability, Business Auto Liability and Physical Damage abd Stop Gap Liability.

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