Summary: Purchasing errors and omissions insurance is a cost-effective move for professional home inspectors. It can save those thousands of dollars and also save their business.
Errors and omissions insurance is available to professionals in a variety of fields including medical, dental, legal and others. Professional home inspectors also purchase this insurance to safeguard themselves against legal claims when it is shown that they overlooked some element of home inspection, resulting in structural damage or injury.
No two home inspection projects are the same, and smart home inspectors make sure a detailed contract is prepared, reviewed and signed by the homeowners before any work takes place. The contract states the specific responsibilities of the inspector, in other words, what areas of the home he is to inspect. Areas not specified in the contract are not the inspector’s responsibility.
Depending on the reason for the inspection (suspected damage, revisions to a home insurance policy, building code issues, preparation for the sale of the house, etc.), an inspector may look at only one element within the home, or he may perform a floor-to-ceiling inspection of the entire structure. In any of these cases, errors and omissions insurance, commonly called e&o insurance, will protect the inspector should he overlook a part of the inspection.
Common areas a home inspector will investigate include the foundation, the walls, the roof, electrical systems, plumbing systems and heating and cooling systems. Many other areas may be specified in the contract based on the homeowner’s needs. One doesn’t have to be a professional inspector to imagine the complexity this work can entail.
And when there’s complexity, there’s always the possibility that something will get missed, because humans make errors. When an error is made in a home inspection and it results in some sort of financial outlay down the line, the inspector can be held liable for all repair or replacement costs.
An inspector can also be held responsible for human injury or death if something he overlooked results in these catastrophes. Every year, millions of dollars worth of lawsuits are filed against home inspectors because of errors they made during inspections. Most private inspectors and inspection companies are not able to withstand having to pay a huge sum to the plaintiffs in these cases. It’s only with errors and omissions insurance can these professionals can safeguard their businesses and continue on with their work.
Lawsuits are filed by the thousands every day throughout the United States. People are prone to go directly to an attorney any time something goes wrong. In many cases, a home inspector will be found innocent of the charges brought against him, but in cases where it is proven that a disastrous error was made, insurance is the only way for the inspector to be protected.
For this reason, errors and omissions insurance is truly a cost-effective purchase for home inspectors and home inspection companies. The cost is a fraction of what they would pay to settle a serious lawsuit.