Why should you have home inspector insurance? This question might be something you’ve asked yourself.
Escamilla believed that insurance was an option for more experienced inspectors earlier in his career. He used to think that insurance was optional for experienced inspectors like himself. But as he started growing his business and hired inspectors, the situation changed. More inspections were conducted, more clients were hired, and there was more opportunity for a complaint.
He said, “I felt the need for insurance to protect myself.”
But, he was not able to obtain general liability and errors and omissions coverage before his fear became a reality.
Escamilla stated that Escamilla had missed something and that it could have been very ugly.
After a lot of back and forth, the client was more understanding than he expected. Escamilla and his firm spent $7,500 to resolve the problem. Escamilla reflected on the incident and was grateful that it didn’t end differently.
“Had I known I had insurance, I wouldn’t have faced that kind of problem.”
To have or not to have insurance.
Escamilla’s story might seem too familiar to you. You might be one of those home inspectors who put off getting home inspection insurance until the last minute. However, $7,500 is quite affordable. Escamilla had the good fortune to avoid court and keep his settlement (and attorney fees) under the double digits in an industry where nearly half of home inspectors are subject to claims during their careers.
We, as a home inspection insurance company, love to tell you how important it is to have insurance. But your concerns are worth listening to. We went to inspectors and asked them about common reasons they might not have insurance. We then asked more inspectors to explain how they would address these concerns. (We’ll also add a little of our opinion.
Let’s now look at four reasons you shouldn’t have home inspection insurance, and many more reasons you should.
“Insurance is too costly!”
Maybe you are new to inspection, or you have been in the business for a while. You’ve likely heard inspectors complain about insurance costs. Insurance can seem like something you have to do once you’re established and have many referrals. Your wallet may feel too thin due to startup costs and marketing expenses. You might not want to purchase insurance if it isn’t “absolutely necessary.” It may not be a priority to get insurance if you’re worried about getting established.
Long-standing inspectors may also have difficulty including insurance in their business plans. They might believe it is an optional expense that does not fit within their budget. If your budget is tight, cautionary tales and “what-if” scenarios will not convince you that insurance costs are worth it.
In reality, it can cost more to not have insurance.
Although it may seem expensive to purchase E&O or general liability coverage, the actual cost of a claim is much lower. We will resolve all complaints free of charge to our inspectors. Help us by reporting any claims early! Some claims will go to court. These cases can cost thousands to defend and thousands to settle with the client. Even if you don’t appear in court, it is possible to settle your claim outside of court. While it may be more cost-effective to settle outside of court, you could end up paying more for the inspection fee and the damages.
It can be costly to pay for damage caused by you during an inspection ( general liabilities claims). You will have to pay for the replacement of the floor if water is left running. You will also need to cover any medical expenses incurred if you slip in the attic.
Insurance isn’t that expensive in the grand scheme. It is costly if you fail to secure a property worth half a million dollars and it comes back at you.
Particularly at risk are new inspectors. They’ll be without insurance protection for early inspections if they wait for business to pick up. Those first inspections could result in higher claims due to a lack of experience.
It is a good business practice to charge enough to reduce risk.
You see the value in mitigating risk, but you think that insurance premiums are too costly?
If your budget is not sufficient to cover insurance premiums, then you might be undervaluing the work you do by charging too much for inspections.
Bolt said, “If you don’t have the money to pay for insurance, you will soon be out of business.” Bolt stated that if insurance is too costly, you don’t charge enough to cover its cost.
You and your inspections are worth the cost of insurance. Find out more about pricing inspections.
“I don’t need insurance.” I’m top-notch!”
You have spent a lot of time learning to be a home inspector. You may have attended classes, passed the National Home Inspector Exam, shadowed experienced inspectors and become an active member of your organization. You might also help other inspectors by shadowing, podcasting or teaching courses. Your experience and training make you confident in your ability to provide quality service for your clients. It might seem like all your complaints and unhappy clients are behind it. Bad things can happen to inspectors too.
While professionalism and hard work are important for your career, false assurance can make you vulnerable. Hyper-competent inspectors are still at risk of lawsuits and being sued. Remember those statistics earlier? Over half of inspectors will have at most one claim in their careers. You can get it.
But how do you know? How can you sue a client if you do a perfect inspection?
It turns out that the customer may not always be right.
You’ll see that the Top 10 Reasons Clients Sue Home Inspectors are based on unrealistic expectations about what should be included and excluded from a home inspection. There are some things you can communicate clearly, like having an inspection agreement in writing and a detailed inspection report. However, there are some clients who will just point the finger at you.
Even the most skilled home inspector in chandler can have the worst customers.” It’s a good business practice to have errors and omissions coverage for service-oriented businesses.
Even the greatest can make mistakes.
Even if you do your best to avoid making mistakes, accidents can still happen. (Bodily injury and property damage are the most common causes of claims, as we have already mentioned. Accidents!) Accidents! You will need someone to look out for you, whether you make a mistake such as failing to identify a defective roof or have an accident like dropping the ladder on a homeowner’s vehicle.
Yaakov Fisgus from Inspect it Rite in New Jersey is one of many inspectors. Others work as a sole proprietor or with their own businesses. Inspectors often feel the need to protect their livelihood and family’s well-being. Many inspectors opt to have insurance to protect their business from simple mistakes.
Fisgus stated, “I want to be able to rest at night knowing that even if I make a mistake, God forbid, it won’t affect my ability to recover everything.” “At the end, we all are human. We all have days when we feel sick, get a cold or are distracted by other things. It happens.
It doesn’t make you any more knowledgeable or professional for thinking that you won’t make mistakes. We all make mistakes, so it doesn’t matter if you get caught. Insurance can help you avoid that stress and vulnerability.
“Insurance places a target upon your back!”
Some inspectors have received calls from clients after an inspection asking for their insurance information. It is possible to suspect that clients view you as a money cow to fix up their homes, provided they can prove that you did not find a defect. This suspicion could be reinforced by examples from other industries that show people running into traffic or hurt themselves in a venue to make insurance money. Is there anything stopping you from making a quick buck for your clients? Some inspectors wonder if being covered by home inspector insurance makes them a target.
Your insurance information is confidential – unless you share it.
We covered this question in an previous article. However, it is important to remind that insured inspectors are not more likely to be the subject of claims than non-insured inspectors. This is based on data from state inspectors. Insurers in states that require insurance do not have a higher likelihood of receiving claims than those in unregulated states.
“If you don’t have insurance people who want their money fixed or because they missed something will come after you in one way or the other. You’re putting your family and property in danger.
You must also state that you have insurance so no one else will know. Potential claimants won’t find out if you are willing to tell them or wait until they file a lawsuit. Your potential claimants won’t be able to target you if you don’t advertise your insurance information or offer it to clients or agents.
Clients and lawyers also want easy money, which isn’t always in the form of insurance money.
Many people assume that insurance companies will settle for the client’s cost. In some cases this is true. Inspector Pro’s experienced and thorough claims handling processes ensure that your claims are resolved in your best interests.
Clients and lawyers believe that sues are a way to make easy money. Easy money and insurance money are not the same thing. Our claims team specializes in claims related to inspection. They are familiar with the rules and regulations and can help you resolve any claims or complaints. We only settle claims when it is best for our clients, not when it’s best to their claimants.
“I can handle all my complaints better by myself!”
If you were not confident in your ability and abilities to communicate with clients, you wouldn’t have opened your inspection business. Even if there is a complaint, it might be a reason to not carry insurance. A solid inspection agreement is what you consider the “perfect protection.” You may also have a warranty for your inspections. Perhaps you have a sister who’s a lawyer and an emergency savings account. No matter what reason it may be, you will likely be able to handle any claim that comes along.
Inspection claims are not something you can understand until you have dealt with a lot of them.
There are two distinct things about inspecting homes and resolving disputes. Both require industry knowledge, but claims resolution requires legal expertise. Even if you have handled a complaint by phone once, it doesn’t necessarily mean that you can handle a lawsuit.
An experienced claims team is crucial in this situation. An experienced claims team will be able to help you with responding to an attorney’s letters, enforce the provisions of your inspection agreement, as well as defending your innocence. Home inspector insurance claims teams will have the necessary foundational knowledge to better defend you than a lawyer, who will need to catch up. Your claims team will have a deep understanding of the laws and court precedents that may affect your case. You will get a quicker resolution and a better result.
For the safety of our buyers, we recommend that an electrician be licensed to fix electrical problems. Joe Ballard, 406 Property Inspectors in Montana said that if we don’t turn around and use a professional in the buyer’s corner for something like [claims], we’re not following our own advice].
