Insurance for Home Inspectors
As a professional home inspector, it’s essential to make sure you have good insurance coverage. This should include having a professional liability insurance policy. Errors and omissions insurance protects you from the expensive costs of a liability lawsuit as well as other financial damages and the possible loss of assets. So, how much does home inspector insurance cost, and what does it cover? This article discusses the details of the average Errors and Omissions or EO insurance cost and what it can do to protect you.
Errors and Omissions Insurance Explained
Errors and omissions insurance for home inspectors is designed to protect you and your company from losses associated with lawsuits. These lawsuits may claim that you made mistakes or omissions while performing your duties as a professional home inspector. If a customer attempts to sue you or take you to court, this vital insurance can help pay your defense costs and cover legal settlements. Another term for EO insurance is professional liability insurance. Mistakes can happen, so it’s very important to be prepared. A customer can sue you or your business for negligence, misrepresentation, violation of good faith, providing inaccurate advice, or even personal injury like libel or slander. Depending on the circumstances, they may also attempt to sue you for errors and omissions. While most of these scenarios are not common in the home inspection industry, they do happen.
Several key items are included in your EO insurance cost that covers damages like any judgments and settlements that result from a lawsuit. This type of insurance will also pay for legal defense costs like attorney fees and court-related expenses. It also helps to cover expenditures related to proceedings made by licensing, regulatory, or other governmental agencies. Most importantly, your errors and omissions insurance will cover loss of earnings (depending on your policy) that result from time spent dealing with court trials and depositions.
What is a scenario where you would need your errors and omissions insurance? Let’s say you inspected a stairway and deemed it safe. A few months later, the homeowner falls down the stairs due to a loose or faulty railing and gets injured. They may attempt to sue you, claiming that you were either negligent or made an error in your report when you claimed it was safe. While a home inspection is only good up to the actual date it was performed, these types of lawsuits are not uncommon. It’s impossible to avoid a lawsuit if a customer wants to sue you. However, there are some things you can do to mitigate your risk. First, be as thorough and detailed as possible during the inspection and in your home inspection reports. Never give any advice to customers regarding how to make repairs, and never tell them that specific safety-related issues are ok to put off or ignore. Be as honest and concise as possible so you don’t open yourself up to scrutiny or accusations later.
EO Insurance Cost
How much is home inspector insurance? Several factors go into the price of your premium, including:
- Business size: Home inspection companies with higher numbers of employees have higher risks, while independent inspectors and small businesses have lower risks which mean they receive lower rates.
- Location: The city or state where your business is located can play a role in the cost of your premiums. This usually depends on your particular jurisdiction and laws regarding minimum coverage requirements.
- Claims history: How much does EO insurance cost? Well, if you’ve had lawsuits or filed claims in the past, your cost will be higher.
- Employee training: If you can show your insurance company that you provide employee training on reducing risk, it may lower your rates.
- Contracts: The insurance company will look at your client contracts and how they’re written. Specific verbiage can either increase or decrease your odds of liability.
- Coverage limits: As with almost any type of insurance, the higher the coverage limit, the higher your premiums will be.
- Revenue: Generally, the more revenue a business has, the higher the insurance premium costs are.
The average cost of EO insurance is $59 per month or around $713 per year. Be prepared to pay between $500 and $1,000 annually for your errors and omissions insurance. You may pay more if you have a larger company or live in a particular state with higher limit requirements. Certain circumstances and different insurance companies will require businesses to pay a separate premium per employee. Always make sure that you read the fine print carefully and ask questions. Ensure that you get several quotes or speak with a licensed insurance broker who can help you find the best policy and the lowest premiums for your home inspection business.
EO Coverage Amount for Home Inspectors
You might wonder what your coverage amount should be when you get an EO insurance policy. Your coverage limits will depend on the insurance company you use and the specific policy details you choose. In most cases, errors and omissions policies cover approximately $250,000 up to $2 million. Remember that some states have policy coverage limits, so your actual coverage amount will vary. Keep in mind that you will have to pay the difference between your insurance coverage amount and any remaining balance. Ideally, the highest limit available is the best way to protect you and your business.
Having errors and omissions insurance for home inspectors is a smart way to protect yourself and your business. Even if you never need to use it, this insurance is crucial if you want peace of mind. Include EO insurance as part of your overall business insurance plan so that you can stay protected from liability and lawsuits. At Inspection Support Network, we’re here to help make running your business easier. Be sure to check out our software features and sign up for your free trial today.