Home inspectors face significant liability risks during inspections. Even when an inspection is thorough, a missed defect or accidental damage can lead to costly claims. Regardless of how careful an inspector is, they may still be held accountable if a buyer believes something important was overlooked.
Two of the most important insurance policies for inspectors are General Liability (GL) and Errors & Omissions (E&O) insurance. While both provide liability protection, they cover very different types of risks.
In this guide, we explain the difference between General Liability vs Errors & Omissions insurance for home inspectors, what each policy covers, and why most inspectors should carry both types of coverage.
General Liability vs. Errors and Omissions Insurance: What’s The Difference?
General Liability and Errors and Omissions Insurance are both a type of Liability Insurance used by home inspectors. However, these two types of insurance protect you in different ways.
General Liability Insurance protects you from claims that include bodily injury or property damages. On the other hand, Errors and Omissions Insurance protects you from claims that arise from negligence, professional mistakes, or missed issues during an inspection.
While General Liability Insurance and Errors and Omissions Insurance coverage seem to overlap, the exclusions found in both policies highlight why many inspectors carry both coverages.
| Coverage Type | What It Covers | Example |
| General Liability (GL) | Bodily injury or property damage caused during an inspection | Inspector accidentally damages a stove or someone falls from the inspector’s ladder |
| Errors & Omissions (E&O) | Professional mistakes, negligence, or missed defects in inspection reports | Inspector fails to identify water damage or structural issues |
Typical exclusions found in General Liability policies for home inspectors include Intangible Property (computer data), Impaired Property (loss of use), and Professional Services.
E&O policies often exclude Bodily Injury, Property Damage, and Personal & Advertising Injury. These exclusions demonstrate why both policies are important for inspectors.
Find Your State’s Requirements for Home Inspector Insurance
What Does Errors & Omissions Insurance Cover for Home Inspectors?
Errors and Omissions insurance (or as it is called in the industry E&O Insurance) for home inspectors is by far the most utilized insurance for home inspectors. A majority of claims come from a buyer stating the inspector missed something of importance during the inspection. Many buyers forget that a home inspection is just a visual inspection at that specific moment in time and feel the inspector should have foreseen, for example, the hot water heater going out or the presence of water intrusion behind the drywall.
Errors & Omissions insurance is there to protect an inspector in the case of the buyer feeling something was missed, along with actual, accidental oversight. With so many areas inspectors are expected to cover during the course of a home inspection, it is natural that oversight can and does occur.
If a claim arises, E&O insurance typically covers:
- Legal defense costs
- Settlement negotiations
- Potential payouts to clients
Claims can range from simply refunding the inspection fee to damages exceeding $250,000, making E&O coverage essential for protecting a home inspection business.
What Does General Liability Insurance Cover for Home Inspectors?
General Liability is fairly standard insurance for home inspectors. GL insurance is there to cover the bodily injury and property damage. For example, if an inspector were to fall through an attic or a young child climbs the inspector’s ladder and subsequently breaks their arm from falling.
No matter how careful you are, there is no guarantee on the job that everything will go smoothly.
Common General Liability claims for home inspectors include:
- Accidental property damage during inspections
- Injuries caused by inspection equipment such as ladders
- Damage to appliances, fixtures, or building components
Many real estate professionals and builders may also require proof of General Liability coverage before allowing an inspection to take place.
General Liability coverage may also extend to personal and advertising injury claims, such as libel or slander, and contingent bodily injury or property damage connected to an inspection.
Common Insurance Claims for Home Inspectors
The vast majority of claims against home inspectors lack merit and occur when buyers misunderstand the scope of the inspection or fail to fully review the inspection report.
Missed Defect Claim (Covered by E&O Insurance)
A claim was filed against a home inspector because the buyer noticed an odor that had not been discernible prior to the purchase of the home.
In this case, the seller had pets and urine contamination was later discovered in the carpets and baseboards using a black light.
Even though the odor was not present during the inspection and inspection standards did not require identifying pet odors, the buyer’s attorney demanded $55,000 in damages.
The inspector reported the claim immediately, and the insurance company handled the situation on their behalf without additional costs beyond the policy coverage.
Property Damage Claim (Covered by General Liability Insurance)
In another situation, an inspector accidentally turned on a stove when their tool bag hit the control knob while leaving the home.
The stove and backsplash were severely damaged, resulting in approximately $12,000 in repair costs.
Because the inspector carried General Liability insurance, their out-of-pocket expense was limited to their $250 deductible.
These examples demonstrate how both policies protect inspectors from different types of liability exposure.
Do Home Inspectors Need Both GL and E&O Insurance?
Home inspectors need both E&O and General Liability insurance to cover negligence, bodily injury, and property damage claims. The absence of any of these two insurance leaves the home inspector vulnerable to potential claims such as a claim for property damage during an inspection (general liability) or a claim that they made mistakes or incomplete inspection (E&O).
In the case of a home inspector having two different insurers and a claim that encompasses some or all of the above exposures, the situation quite often becomes a finger-pointing exercise with both insurers looking for the other to respond to the claim. It would not be out of the question for both carriers to send claim denials for the areas that are excluded under their policy forms.
Discuss the advantages of combining both General Liability and Errors & Omissions insurance with an EliteMGA agent: (800) 355-1185.
What Insurance Do Home Inspectors Need?
Insurance for home inspectors is extremely important, but having the right coverage is equally critical.
Home buyers are often making the largest investment of their lives, and they rely heavily on the expertise of a home inspector to evaluate the property. Because so much money is involved in a real estate transaction, the likelihood of legal disputes is higher.
Home inspectors should check their state insurance requirements and determine whether additional services require specialized coverage.
Ancillary inspection services that may require additional coverage include:
- Termite inspections
- Radon testing
- Mold inspections
- Infrared inspections
- Pool and spa inspections
Even when not required by state law, inspectors should strongly consider purchasing both Errors & Omissions insurance and General Liability insurance to ensure they remain fully protected.
What Happens if I Don’t Have Proper Home Inspector Insurance?
Home inspectors that do not have adequate insurance are taking a big financial risk as litigation is time-consuming as well as expensive. It is the responsibility of the home inspector to fully understand how General Liability Insurance, as well as Errors & Omissions Insurance, works in conjunction with every aspect of their professional inspection process. Only then can they work collaboratively with their insurance provider to craft a policy that offers the right amount and types of protection.
Why Do Home Inspectors Need Insurance?
Carrying Errors and Omissions (E&O) and General Liability (GL) insurance as a home and/or building inspector is important contrary to what some people might tell you. Like any form of insurance, E&O and GL are designed to protect you from unforeseen or unintended circumstances that result in some sort of loss or hardship for others. When a home buyer hires you to perform a home inspection, they are relying on your professional opinion before making one of the largest investments in their lifetime. But what happens if you make a mistake or oversight and your client is financially harmed as a result? What happens if you did NOT make a mistake, yet you are named in a lawsuit related to a real estate transaction where you were the inspector? You don’t want to find out the hard way if you’re not properly insured.
If you’re an inspector with all the latest tools and technology, drones especially, we have a cost-effective policy specifically designed for home inspector’s tools and equipment.
Choose the Right Home Inspector Insurance
Unfortunately, it is not a matter of if, but a matter of when you’ll be sued. As an inspector, you have enough to worry about between growing your home inspection business, customer service, continuing education, and actually performing a quality inspection. Make sure that you are protected with the right kind of insurance so that you can give your full attention to your clients and sleep better at night. EliteMGA offers both E&O and GL insurance specialized for home inspectors.
