Home Inspector Liability 101
Even the most diligent and thorough home inspector can occasionally miss critical items. While this certainly doesn’t happen often, it’s important to know if you’re protected and what to do if you suspect you might be liable for a defect in a home that you’ve inspected. Here, we’ll outline what home inspectors may be liable for, how to protect yourself against liability, and what type of insurance you should carry to protect yourself and your business best.
Are home inspectors liable for missing defects?
You’re probably familiar with the thorough inspection checklist for the main systems in a home. These systems include the foundation, structure, roof, plumbing, and electrical. Within these categories, there are many things home inspectors will look for. That checklist is there to help prevent you from forgetting to check specific areas and help create a thorough and detailed inspection report for the homeowner.
If there’s a defect in one of those areas on your home inspection list, and you missed it due to an oversight, you could be liable for that defect. However, there is a lot of nuance around your liability. The timeline of when the homeowner notices the defect and when the inspection was complete is important because it then becomes difficult to tell whether the damage or defect occurred after your inspection.
Adding to the potential murkiness of home inspection liability is that each state has its own rules around home inspections. Some states have more stringent, detailed regulations regarding what is covered by a home inspection, whereas some leave much of that to the home inspector to determine.
A factor that homeowners often conflate is that a home inspection, unless specifically noted, only covers up to the surface finish of the home and doesn’t go beyond the walls or closed surfaces. This is the case with roofs as well, as the inspector is responsible for observing and reporting on the roof’s condition. However, they are not obligated to go on the roof and can only make an assessment from a place of removed observation.
How to avoid liability
- Ensure you have a signed contract before doing all inspections
It can be easy, especially if your new clients are easy-going, open, and seem trustworthy, to forget to get a signed contract. Whatever the reason this might fall by the wayside, it’s imperative to ensure that you have your contract signed before you begin work. This provides a safety net for yourself, your business, and the homeowners.
- Take photos
Taking detailed photos has become common practice in home inspections, but its importance can’t be overstated. If there’s a question about a defect that may or may not have been present during your inspection, and you can provide a photo of that specific element, that could be an open and closed issue.
Not to mention, your homeowners will likely find those photos extremely helpful in interpreting your report and identifying the issues you cover.
- Document everything
Equally important as photos are written documentation of everything you assess during your home inspection. Good documentation helps you keep things straight, as no doubt it’s easy to mix up small details when you do so many inspections, but it also provides a legal backstop for you if there is a question of liability in the future.
- Have the right insurance
Insurance is one of those things that can be easy not to think about, but you’ll find yourself neverendingly grateful for it when you do need it. Chances are, throughout your career as a home inspector, you’ll need to rely on your insurance more than once. Making sure you have the right level of coverage is essential to protect your business. More on this in the next section!
Home inspection liability insurance
As a professional who does their job inside other people’s homes, it shouldn’t be surprising that insurance will be very important for you. The question is, what level of insurance will best protect you and how do you make that decision? Home inspectors have two types of insurance that protect you in different ways. Below, we’ll discuss their differences and whether it’s worth it for you to have one or both.
General liability insurance
General liability insurance is something that almost anyone whose job involves being in the homes of others will carry. This type of insurance prevents you from hurting yourself inside someone else’s home during the course of your job and accidentally damaging part of their home while you’re doing an inspection.
Say you’re looking around the foundation of the client’s home and accidentally knocked a rock with your boot, causing it to crack or chip a basement window. It’s an accident, but the repair will take money and time. Without general liability insurance, the cost is solely on you to pay for this repair. In this case, the damage is relatively small and you may not even want to go through your insurance at all. However, it illustrates the kind of accident that easily happens on job sites.
As another example, a homeowner could have boxes stacked on an unstable shelf that topples, potentially hurting you and causing an injury. An accident like this is something else that general liability insurance could cover, potentially giving you some buffer time if you need to take a few days off work to recover.
Errors & Omissions Insurance
E&O insurance covers accidents and some personal injuries at a job site. Conversely, Errors & Omissions insurance covers mistakes you might make during the course of an inspection. If a client comes back after an inspection was done and alleges that you overlooked something that will cost them financial loss and makes accusations of negligence, Errors & Omissions insurance may cover any costs you incur from legal fees as a result of those allegations.
While we all hope for levelheaded, understanding, and easy to work with homeowners; still the necessity remains to hope for the best and prepare for the worst. Knowing the ins and outs of where you’re liable as a home inspector and how to protect yourself by avoiding any liability questions in the first place can help you sidestep tons of future headaches for both yourself and your clients. With a little research and planning, you’ll be well prepared to know where you stand in a liability conversation.