You Broke it You Bought It? Who Pays When Damage Occurs

Sooner or later it’s bound to happen. It doesn’t matter how careful you are, some day, some way, you’ll probably break something during the course of performing a home inspection. Liability management is a “huge issue for home inspectors,” says Working RE magazine. So much so that insurance isn’t optional, and the utmost care is part of daily operations.

Situations vary, and there are some gray areas. The bottom line is that in most cases, the home inspector can be found liable for anything from accidental damage to damage incurred due to homeowner neglect. With the right level of protection, you probably won’t have to come out of pocket for damage or omissions that happen while performing your job.

Steps to Avoid Liability

Pre-inspection agreements with a limitation of liability clause go a long way toward avoiding liability, says Working RE. But be aware that just because you add a clause doesn’t mean that it’s legal, even if your customer signed it. Be reasonable in limiting liability, and you’ll fare better if you ever find yourself in the unfortunate position of being sued for damage compensation.

Practicing safe home inspection methods also helps considerably. Remember your Standards of Practice. You’re never required to inspect or enter any area of a home that’s inaccessible. If you’re ever in the same position as the poor soul that home inspector Hugh Cairns describes in his reply to a liability question, take the safe route and don’t set your ladder to access an attic that has obstacles in the way.

Of course, that’s no failsafe, because inspectors can also be sued for not inspecting parts of a home that are inaccessible. A good pre-inspection contract and a candid conversation with the customer can help clarify what you can and can’t do and where you can and can’t go in a home inspection.

Getting the Right Insurance

In addition to using great care, you’ll need two types of insurance, although it might come as both in one policy. Liability does not cover it all, and if that’s all you’ve got you might be in trouble. General liability insurance covers you against claims for issues such as damage or injury at the home you’re inspecting, and it also covers injuries that you might incur in the line of work. What it doesn’t cover is an unhappy customer that finds a defect that you didn’t.

Errors and Omissions or E&O insurance covers that. If you overlook a faulty flue, slanted staircase, faulty furnace or other defect, E&O is what steps up to answer the claim and make the payment if necessary.

Another important element is Claims Made coverage. Included in many, but not all, home inspection business insurance policies, Claims Made covers prior acts as long as your insurance never lapses. If a customer goes on to buy a house based on your inspection and later gets injured on something that you didn’t report, it’s covered.

Good practices and good insurance are part of the backbone of a home inspector’s business. Good practices help minimize the possibility of damage to the home or injury to the people in it. Good insurance protects you against serious financial loss if damage or omissions are truly your fault.

Everyone makes mistakes, even great home inspectors, terrific customers and wonderful homeowners. There’s no foolproof way to avoid liability. But with a conscientious approach and a healthy dose of insurance, you’ll be ready to face another day on the job. Enroll with ICA School now and get ready to start your new career as a home inspector.