Insurance protects inspectors in all 50 states and the District of Columbia against risks (claims) by providing them with 1) defense, including an attorney and legal costs, and 2) indemnity, or any payout at the end of litigation.
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There are many reasons inspectors choose to carry insurance. From our survey of over 450 home inspectors, we found that the top three reasons home inspectors carry insurance are:
1. To avoid large payouts for claims
2. To receive claims handling and defense, and
3. To fulfill licensing and state requirements.
By investing in insurance, you safeguard the business you’ve worked so hard to build.
Many states have licensing requirements and regulations that affect home inspectors. In fact, some states mandate that inspectors carry a certain amount of insurance coverage to protect consumers.
Click on your state below to see your area’s home inspector insurance requirements.
Scroll down for the list of states in alphabetical order.
Errors and omissions (E&O) insurance, also known as professional liability insurance, protects you when your clients accuse you of missing something during their inspection—or, at the very least, leaving it out of your report. In other words, you’re protected when clients accuse you of not doing your job right. Some examples of common E&O claims include:
- A home inspector allegedly failed to report significant water intrusion.
- A claimant accused a home inspector of missing leaks in their roof.
- Purportedly, a home inspector failed to detect a compromised foundation.
- A home inspector allegedly didn’t report mold.
- A claimant accused a home inspector of misidentifying their plumbing.
General liability (GL) insurance protects you when your clients make broad allegations against you. Unlike E&O claims,
GL claims don’t typically question the quality of your home inspection or service. Rather, GL claims involve any bodily injury or property damage that result from the inspection. Some examples of common GL claims include:
- A home inspector forgot to turn off the tap after testing, causing flood damage.
- During the inspection, the inspector tripped the GFCI breaker, resulting in spoiled frozen game in the freezer.
- While inspecting an attic, a home inspector accidentally stepped through the ceiling.
- During the resistance test of the reverse jam function on an automatic garage door, the center arm broke off and two of the panels were damaged.
- A home inspector forgot to turn the heat back on during a winter inspection, causing the piping to freeze and burst.
Inspectors don’t have full protection unless they carry both E&O and GL coverage. Failure to carry both coverage types leaves inspectors open to specific types of allegations: allegations that they missed something during an inspection (E&O) or allegations that they damaged something or hurt someone (GL).
To learn more, read our article “E&O vs General Liability: What they are and why you need both.”
Insurance limits represent the total dollar amount your insurance company can pay toward your covered claims in a given policy period. So long as your policy covers a claim and that claim costs no more than the amount allocated in your insurance limits, you’re just responsible for paying your deductible. That all changes when a claim exceeds your insurance limits. When that happens, the responsibility to respond to and pay for the claim shifts from the insurance company to you. That’s why it’s important to purchase the insurance limits that will most likely cover your needs.
Here at InspectorPro, we offer insurance limits of $100,000/$100,000, $300,000/$300,000, $500,000/$500,000, $1,000,000/$1,000,000, and $1,000,000/$2,000,000 on most policies. Typically, the lower your limits, the lower your premium since the insurance company is obligated to pay less when a claim comes around.
When choosing your home inspection insurance limits, we recommend considering the following:
- Does your state have a minimum insurance requirement that you must meet?
- Does your policy have separate errors and omissions (E&O) and general liability (GL) limits—like InspectorPro policies—to give you more coverage? Or does your policy have shared limits and, therefore, less money to cover claims?
- Is your policy free of sublimits, like the InspectorPro policies are? Or does your policy cap the coverage for certain risks, like mold testing?
- What’s your risk tolerance? How much are you willing to leave to chance? How much do you want to protect yourself?
Learn more from our article “4 Ways to (Re)Choose Your Limits.”
Your deductible represents the amount you pay the insurance carrier for defense and payout help for each claim. Here at InspectorPro, we offer errors and omissions (E&O) deductibles of $1,500, $2,500, and $5,000 and general liability (GL) deductibles of $1,000 on most policies. Typically, the lower your deductible, the higher your premium since you’re obligated to pay less when a claim comes around.
To determine the right deductible for you, we suggest asking:
1. How much can you reasonably save to pay for an unexpected claim?
If you don’t have the ability to pay $5,000 for a claim, a $5,000 deductible may not be right for you.
2. How much of a difference do those annual savings on premiums make to you?
Some businesses who have the savings in place for claims consider the premium discount a no-claims bonus.
3. How much are you willing to bet that you don’t have a claim?
There’s no sure-fire way to predict if and when you’ll have a claim, so it’s up to you to figure out what level of risk you can stomach.
Still not sure which deductible to choose? Learn more about your options in our article “3 Ways Your Deductible Determines What You Spend and When.”
A loss run is a report of your claims history over the last five years. By looking at past insurance claims data, insurers determine whether to insure you and at what cost.
To get a copy of the report, email your broker or your provider's dedicated loss run email, where applicable, and ask for your current loss runs. If you have your policy number on hand, include it in your email. If not, your provider should be able to pull up your policy with your business name and contact information.
Note that insurance providers typically do not accept loss run requests from third parties. For example, if you need your loss run for a quote with us, we cannot request a loss run from your current provider on your behalf. Loss runs contain confidential information about your business. It's up to you to authorize that information's release.
After you've made your request, your provider will email you your loss run, which you can then forward to us for a quote. Most providers can get you your loss run within a few hours or a couple of business days. In addition, most states require that you receive loss runs promptly. (In California, for example, insureds have the right to receive loss runs within 10 business days of their request.)
The declarations, or dec page, is the page(s) of your policy that provide key information about your insurance coverage, like your policy number and insurance limits. Most importantly, your dec page includes proof of retroactive, or prior acts, coverage.
Your prior acts coverage starts on your retroactive date, which is the day you started carrying continuous home inspection insurance coverage with us or another provider. That retro coverage stays intact so long as you renew your insurance on time each year and, if switching providers, you provide proof of retro coverage with your policy declarations.
To get a copy, simply pull the page from your current policy. Or, you can email us your entire current policy and we can retrieve the dec page(s) for you. If you don’t have a copy of your policy, you can email your broker or their assistant and ask for your dec page. If you have your policy number on hand, include it in your email. If not, your provider should be able to pull up your policy with your business name and contact information.
Note that insurance providers typically do not accept dec page requests from third parties. For example, if you need your dec page for a quote with us, we cannot request your dec page from your current provider on your behalf. Declarations contain confidential information about your business. It's up to you to authorize that information's release.
After you've made your request, your provider will email you your dec page, which you can then forward to us for a quote. Most providers can get you your dec page within a few hours or within a couple of business days.