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Everything Home Inspectors Need to Know About Errors and Omissions Insurance

By Published On: June 7th, 2023Categories: Home Inspection Career Guide0 Comments

Insurance is crucial for any business to protect itself against accidents or claims. Both ASHI and InterNACHI recommend that home inspectors have errors and omissions insurance as well as general liability coverage.

In this blog, we’ll break down what errors and omissions insurance is, why it’s important for your home inspection business, and how it can protect you and your business.

Your Guide to Errors and Omission Insurance for Home Inspectors

Also called professional liability, errors and omissions insurance (E&O) protects your business from claims that are made from mistakes that result in costing your client money on their home.

This coverage helps pay for legal defense costs if a customer files a lawsuit against you for:

  • Bodily injury
  • Property damage
  • Personal injury
  • Products/completed operations
  • Professional negligence
  • Previous contract work
  • Subcontractor errors
  • Third party injury and property damage

Sometimes home inspectors uncover issues that homebuyers don’t want to hear about if an inspection uncovers issues within a home. Nobody likes bad news, especially if a customer recently purchased a home and now finds that they have problems that require fixing. When a homebuyer is unhappy after purchasing a home, the home inspector is asked plenty of questions about a potential issue and who they should contact to resolve the issues.

Home inspectors do not deserve this blame, but it happens. That’s why it’s a best practice to invest in your business by purchasing E&O insurance for peace of mind.

Mistakes do happen. No one is perfect. But if a mistake is made, you want to make sure you’re covered and not held liable to foot the bill.

Say a claim is brought against your company for $90,000, your E&O insurance policy will cover the legal defense costs. Instead of paying the full claim cost, your insurance policy will cover roughly 27%.

Which States Require Errors and Omissions Insurance?

Home inspector E&O insurance requirements depend on where you live. Even if your state does not require E&O insurance it is best practice to invest in this for your business. In fact, many states require home inspectors to carry liability insurance, including:

  • Alabama
  • Alaska
  • Arizona
  • Arkansas
  • California
  • Florida
  • Kansas
  • Kentucky
  • Maryland
  • Massachusetts
  • Mississippi
  • Nevada
  • New Jersey
  • New York
  • North Carolina
  • North Dakota
  • Ohio
  • Oklahoma
  • Oregon
  • Pennsylvania
  • Rhode Island
  • Tennessee
  • Texas
  • Virginia

How Much Does it Cost for a Home Inspector to Get Errors and Omission Insurance?

Basic E&O policies range from $600 to $1,200 a year, depending on how much coverage you’re looking for and the state your business operates in. This is a small price to pay for the peace of mind this insurance provides in the case of a customer making a claim against your home inspection business.

For example, if your business handles inspections covering anything hazardous, like radon, the cost of the policy will increase. However, today homebuyers want home inspectors to inspect as much as possible to have their peace of mind when moving into a new home.

Most providers will have different packages they offer. They will range from the basic coverage to general liability coverage, general liability coverage + errors and omissions coverage, or general liability coverage + errors and omissions coverage + commercial auto insurance.

Be sure to shop around and see what companies offer for home inspector insurance policies.

Who Are the Leading Companies to Purchase Your Policy from?

When you begin your search for companies that lead the industry in providing errors and omissions insurance, it can feel overwhelming. To help you get started, we’ve compiled a list of the leading providers of E&O insurance for your company’s policy:

AHIT Students: Remember, along with your course purchase, you receive access to better rates, exclusive benefits, integrated claims assistance, customized agreements, and risk management tools when you sign up for an insurance policy with OREP.

These providers are leaders in the industry and have decades of experience helping home inspectors like you.

About the Author: Ashley Roe

Ashley Roe is a Content Specialist with AHIT and The CE Shop. She writes regularly about home inspection and appraisal. With a reporter's eye and a passion for learning, Ashley stays current on what's happening within each industry. Her goal is to create engaging, relevant, and useful content that both informs and inspires readers.

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