Everything Home Inspectors Need to Know About Errors and Omissions Insurance

Insurance is crucial for any business to protect itself against accidents or claims. Both the American Society of Home Inspectors (ASHI) and the International Association of Certified Home Inspectors™ (InterNACHI™) recommend that home inspectors carry Errors and Omissions insurance as well as general liability coverage.

In this blog, we’ll dive into the details of Errors and Omissions insurance, why it’s important to have when you’re a home inspector, and how it can protect you and your business.

Your Guide to Errors and Omission Insurance for Home Inspectors

Sometimes known as professional liability insurance, Errors and Omissions insurance (E&O) protects your business from claims related to mistakes, oversights, or accusations of either, which may happen during the home inspection process.

E&O coverage helps pay for legal defense costs if a client files a lawsuit against you for:

• Failing to report a defect
• Not meeting the terms of your pre-inspection agreement
• Bodily injury
• Property damage
• Professional negligence
• Previous contract work
• Subcontractor errors
• Third-party injury
• Third-party property damage

Suppose you overlook a minor roof leak in a client’s home that, later, causes significant and water damage to the rest of the home. Or let’s say you fail to identify faulty wiring that poses a fire hazard and results in a client’s expensive repairs.

These oversights – even if unintentional – can result in unhappy clients who may seek legal compensation for damages and/or repairs. E&O insurance protects you and your business from legal claims that can be both stressful and financially draining. This type of insurance is essential for risk management and peace of mind as a small business owner.

E&O insurance is also required in many states to become a licensed home inspector.

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’s important to invest in this protection for your business. The below states require actively licensed home inspectors to carry E&O insurance as part of regulatory requirements.

• 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

States that require E&O insurance for home inspectors usually have minimum coverage amounts. For example, Florida requires home inspectors to carry general liability insurance of at least $300,000. Texas requires home inspectors to purchase a liability insurance policy with a minimum limit of $100,000 per occurrence and an aggregate annual total of at least $100,000. Be sure to review your state ‘s E&O requirements for licensure in detail before purchasing your coverage.

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

Standard E&O policies range from $1,000 to $2,500 per year, sometimes less and sometimes more. Your annual premium depends on how much coverage you’re looking for, the state your business operates in, and other factors including your:

• Experience level
• Claims history
• Deductible

Your annual premium can also depend on the types of inspection work you do, whether you want to add commercial auto insurance, and if you have special equipment – such as drones or thermal imaging cameras – you want to insure.

Most providers offer packages that can be customized for your unique business needs. These packages range from the basic E&O coverage to general liability coverage only, general liability coverage + E&O coverage, or general liability coverage + E&O + commercial auto insurance. Be sure to shop around and compare home inspector insurance policies to see what works best for you and your business.

Who Are the Leading Companies to Purchase Your Policy from?

When you begin your search for providers of E&O insurance, it can feel overwhelming. To help you get started, browse the policies and packages at these leading home inspector insurance providers.

• InspectorPro Insurance* (*This option includes special rates for AHIT students)
• The Hartford
• Progressive Commercial
• Next Insurance

Exclusive E&O Benefits For AHIT Students

If you’re an AHIT student enrolled in home inspection training, remember, you get access to exclusive E&O policy benefits when you purchase an E&O policy from InspectorPro! These benefits include pre-claims assistance, contract discounts, early reporting discounts, deductible discounts, state-specific pre-inspection agreements, risk management tools, and much more. Learn more at InspectorPro.