|
|||
Is your home inspector really insured? Understanding the Difference Between Errors & Omissions and General Liability Insurance You probably notice dozens of home inspectors touting their insurance coverage as a selling point. Insurance coverage SHOULD be one of the criteria you evaluate when trying to find a home inspector. But most people simply ask, "Do you have insurance coverage?" and when the home inspector answers "Yes" they never probe the issue further. An Inspect-It 1st certified home inspector recently discussed the differences in insurance coverage with one of his local real estate offices. As a result, the office immediately ceased using their existing home inspector, who had mislead them for several years regarding the nature of his insurance coverage (and they started using Inspect-It 1st, of course!). In addition to basic auto insurance, your residential or commercial inspector should carry two types of insurance policies: Errors & Omissions (E&O), also often called Professional Liability, and General Liability (GL). What's the difference? I explain it this way: If while performing the inspection, the inspector incorrectly categorizes a defect or misses a defect that is within the scope of the inspection, E&O insurance covers the claim (because the claim is tied to the delivery of the inspector's professional service). Now, if while performing the inspection, the inspector's ladder slips off the roof and damages your lawn gnome, GL will provide insurance coverage (because this is a claim that is not tied to the professional nature of his service). Many home inspectors will only carry GL, and then tell realtors and consumers they have insurance coverage. Why? First, because E&O coverage is expensive. Second, many feel that if they have that large of a claim, they can simply close operations, file bankruptcy, and re-open their business under a new entity name. So in other words, there may be coverage for your lawn gnome, but fixing the leaky roof is coming out of your pocket. So don't hesitate to ask the inspector what kind of insurance they have specifically, and even ask for a copy of the Declarations page as evidence. |