Insurance for Home Inspectors – E&O And GL Insurance

The best liability insurance for home inspector providers will be skilled in answering common questions before they are asked by the inspector and work to ensure that they have a complete understanding of each aspect of the insurance policy.

At EliteMGA, we are committed to our clients. We are constantly striving to offer the most up-to-date, varied coverage, with the most competitive rates, that is why we started our own insurance company just for the Home Inspection business (EliteRE). Our home inspectors work hard, and we believe that they deserve personalized coverage, made just for home inspectors, by the experts that know your business!

To be fully covered, insurance for home inspectors usually includes both errors and omissions insurance and general liability insurance. By coupling these two insurance products together, home inspectors can rest easy knowing that they are covered by the most common claims against home inspectors. EliteMGA’s home inspector insurance is uniquely positioned to offer tailored coverage at competitive rates through their own insurance captive, EliteRE. EliteRE is the first and only insurance carrier 100% dedicated to the home inspection industry and designed with home inspectors in mind. EliteMGA has years of experience providing home inspector liability insurance in all 50 states. By law, certain states require a home inspector to carry insurance. To learn more about your state-specific requirements, visit our State by State Insurance Requirements page.

Every home inspector understands that it is imperative to have liability insurance coverage to protect them and their business. The challenge comes in having an understanding of that home inspector liability insurance policy so that inspectors know what they are protected against and what they are not protected against.

What is Errors and Omissions Insurance (E&O)?

Errors and Omissions (E&O) is the insurance that covers the home inspector and their company in the event that a client holds them responsible for a mistake or omission from the final report that results in additional costs due to property damage or injury. Most E&O policies cover judgments, settlements, and defense costs. Even groundless allegations can cost thousands of dollars in legal defense that can bankrupt a home inspector and their business. A well-constructed E&O policy provides coverage to guard against these costs in the event that a lawsuit is filed.

Although an inspector may think it is the responsibility of the insurer to thoroughly lay out all aspects of the insurance policy in a way that they can understand, that responsibility actually falls on the inspector. It is the home inspector’s responsibility to read every line of the policy and ask questions until they thoroughly understand each item. This is the only way to ensure that they know what is covered and what is not covered. Just like a home buyer should read every page of the inspection report, a responsible home inspector will read every page of his or her policy to have a thorough understanding of what their policy covers and what it excludes. This begins with an explanation of whether the policy covers Claims Made and/or Occurrence.

What Type of Home Inspector Policy Do You Have?

In a Claims Made policy, only claims that occur and are reported while the policy is in effect are covered by the insurance company. In an Occurrence policy, claims reported after the policy ends, but occurred while the policy is in effect are covered by the insurance company.

Although Claims Made policies are standard and less expensive, it is important for a home inspector to understand the nature of an Occurrence policy and determine whether that is the best option regardless of its greater expense.

The two types of exposure that a home inspector must be insured against include bodily injury and property damage. Bodily injury is when the inspector’s actions or alleged errors in their inspection report result in someone being physically harmed. Property Damage is when the inspector’s actions or alleged errors in their inspection report result in damage to the property or loss of use of the property. A home inspector needs both types of coverage to be protected.

What’s the Difference Between General Liability Insurance for Home Inspector and E&O Insurance?

While general liability coverage is an important consideration, the claims are less frequent than errors or omissions and usually of a lower dollar amount. General Liability policies have more restrictions, which results in a less expensive policy. The major restriction is called a “Professional Liability” exclusion that reads “This policy will not cover claims arising out of the rendering or failure to render professional services.” This is why an E&O insurance policy is often referred to as professional liability insurance.

Most major claims that a home inspector will face come from an alleged failure in the rendering of professional services. In other words, Errors & Omissions (E&O) claims. This is why a home inspector E&O insurance policy provides greater specificity of coverage in terms of bodily injury and property damage.

With a basic understanding of insurance for home inspectors, it’s possible to tie all the components together. To be fully protected by insurance, a home inspector is best served by having both General Liability and Errors & Omissions coverage with sufficient coverage for Bodily Injury and Property Damage exposures. This is why it is of vital importance that the inspector understands exactly what they are purchasing and asks for the answers in writing.

Requirements for having liability insurance for home inspectors vary from state to state, with some requiring both E&O and General or neither of the two. It is crucial to understand what is required in the inspector’s home state as a baseline so that they can make determinations about what insurance they are required to purchase and provide during a home inspection. Although expense will always be an important factor, the inspector must weigh the costs of what is covered in their home inspector E&O insurance policy versus the costs of a potential lawsuit. It is important to remember that a home inspector’s insurance policy can have a variety of endorsements. Some of these include drones, tools, mold, termite, radon, septic, pool and spa, mortgage field services, code, lead, wind mitigation, EIFS (Stucco), and carbon monoxide.

Does professional liability insurance for home inspectors cover errors and omissions?

Insurance forms and advertisements are often filled with words that have the same or similar meaning. This question is a case in point. Professional Liability coverage and Errors and Omissions (E&O) coverage are synonymous. This type of insurance indemnifies the policyholder for allegations of negligent acts that result in financial loss. A negligent act could certainly include an error or omission in performing a home inspection service so you could very well state that professional liability insurance for home inspectors covers errors and omissions and vice versa. In either case, the wise Home Inspector professional will want to make sure they have adequate insurance to protect their assets and business from financial loss.

Policies for home inspector liability insurance vary greatly in price based on bodily injury and property damage coverage, claims made vs occurrence policies, limits and deductibles, and more. Since liability insurance for home inspectors can be tailored to your specific business’s needs and services offered, annual deductible options range from $1,500 to $10,000 and liability limits range from $100,000 to exceed $1,000,000. At EliteMGA, we are specialists with over 15 years of experience exclusively insuring home inspectors. With EliteRE, our captive carrier, we can offer competitive pricing with the most appropriate limits and deductibles for your business including specialty coverages and discount opportunities.

Whichever policy you choose, make sure you read the coverage thoroughly and get all your questions answered before signing. The key to getting the right coverage that protects the home inspector and their business is to first read every line of the proposed policy. At that point, the inspector must ask any and all questions they may have to be sure that they understand the policy thoroughly before purchasing it. EliteMGA’s professional and experienced staff take the time to make sure you understand your home inspector’s insurance policy. Get started with a quote today!