Home inspection is an essential part of the real estate buying process. A home is a huge investment and has an enormous amount of emotions involved. This leaves any mistakes the home inspector makes subject to lawsuits. And that is the reason why home inspectors need Errors and Omissions (E&O) insurance.
- Top 4 Providers of Home Inspector E&O Insurance
- What is Home Inspector E&O Insurance?
- Who Needs Home Inspector E&O Insurance?
- What does and doesn’t Home Inspector E&O Insurance Cover?
- How Much does E&O Insurance Cost for Home Inspectors?
Top 4 Providers of Home Inspector E&O Insurance
Finding a good home inspector E&O insurance policy can be tricky since so many companies offer this insurance product. We researched 10+ companies and below are the top 4 providers that we recommend.
- CoverWallet: Best for Comparing Online Quotes
- Inspector Pro: Best for Comprehensive Coverage
- Biberk: Best for Affordable Coverage
- InsuranceBee: Best for Customized Insurance
>>MORE: Best Professional Liability Insurance Companies for Small Businesses
CoverWallet: Best for Comparing Online Quotes
Cover wallet says they combine algorithms, science and magic to create their online quoting system.
In addition to their online quotes, which are ready in a matter of minutes, they can provide a certificate of insurance any time you need one, for free. They can also provide whatever level of coverage you want—basic coverage to satisfy state requirements, or more comprehensive coverage.
If you are looking for a cheap home inspector E&O policy, you’d want to shop around to compare several quotes to find the cheapest one. Getting several quotes from several companies can be time consuming. Working with a digital broker like CoverWallet can be a good option since they are able to provide you with several quotes from the companies that they partner with after processing your information.
Inspector Pro: Best for Comprehensive Coverage
Inspector Pro has over fifty years providing insurance for real estate professionals. They can cover most of the exposures a home inspector faces, such as radon, termites, mold, and septic. They are available in all fifty states as well as Canada.
To apply for coverage from Inspector Pro, simply click on your state to find out what the requirements are. You can then fill out the short form and they will contact you, or you can fill out the application and get coverage right away. They do ask you to describe what inspection standards you use, what type of reports you use, and several other questions related to how you usually do your business.
Biberk: Best for Affordable Coverage
Biberk is part of Warren Buffet’s Berkshire Hathaway. They have forty years of experience insuring small businesses.
They claim to insure small businesses directly—no middleman, no insurance broker—which results in up to 20% lower prices. They insure just about every kind of small business, so if you ever decide to switch careers, you can still stay with Biberk.
InsuranceBee: Best for Customized Insurance
Insurance Bee started in the insurance business in 2010 with the idea of making getting liability insurance quick and painless. They can get you a quote online, if you’re a home inspector, but we were unable to provide all of the information that was needed.
Most of their reviews praise how easy it was to buy a policy and how responsive they are. You can change or modify your policies at any time.
If you prefer to talk to a person, they have advisors that can help you.
This screen shot shows how detailed the application is.
What is Home Inspector E&O Insurance?
Errors and Omissions insurance is another term for professional liability insurance. This insurance will protect you in case you make a mistake (errors) or fail to do something (omissions). Some home inspectors say that it’s not a matter of if you’ll be sued, it’s when you’ll be sued.
For more on professional liability insurance, see “What is Professional Liability Insurance? And Its Cost?”
Who Needs Home Inspector E&O Insurance?
Anyone who does home inspections for a living needs errors and omissions insurance. Home buyers are excited and emotional over the purchase of a new home. The home inspector tells them everything is fine, but when they move in, they discover that the HVAC system is faulty. They feel the home inspector was negligent in not telling them and they file a lawsuit.
On the other hand, the seller of a home may file suit against a home inspector if the potential buyer loses interest in the sale because the home inspector reported defects. According to The Real Deal, nearly one third of all terminated real estate contracts are canceled because of the home inspection.
All of this can leave a home inspector feeling like there’s no way to win. If you do a meticulous inspection and the buyer backs out, the seller could sue. If you miss something, the buyer could sue.
What does Home Inspector E&O Insurance Cover?
Most errors and omissions insurance will cover:
- Legal fees
- Settlements
- Defense costs
- Judgements
Unhappy clients can sue you just because they’re angry and frustrated. The lawsuit may be frivolous, but you still have to defend yourself in court and that can be expensive.
Many states require home inspectors to have some kind of insurance. New Jersey, for example, requires home inspectors to carry an E&O policy with a minimum of a $500,000 aggregate.
What doesn’t It Cover?
Home inspectors often deal with toxic substances, and these are often excluded. Mold, radon, termites, and septic systems.
It also won’t cover you in the case of fraud or criminal activity.
How Much does E&O Insurance Cost for Home Inspectors?
CoverWallet, an online commercial insurance broker, estimates that a basic E&O policy ranges from $600 to $1200 a year, depending on how much coverage you want and what state you live in.
If you often inspect for toxic materials such as radon, mold, or asbestos, a policy starts at about $2,000 a year.
We are able to get 2 quotes from the top 2 companies above and it costs $150-$200 a month for home inspector E&O insurance policy.
Costs vary by companies. You need to shop around with a few companies to compare quotes to get the cheapest policy for your situation. Working with a digital broker like CoverWallet or Simply Business can be a good option since they make it convenient for you to compare several quotes in one place.
>>MORE: Errors and Omissions (E&O) Insurance Costs by Professions
>>MORE: Where to Get No Down Payment Errors and Omissions (E&O) Insurance?
What Benefits Should I Consider When Purchasing E&O Insurance?
You should figure out how much you can afford and weigh that against what is covered in the policy. You should also realize the risk of potential lawsuits against home inspectors has been increasing.
If you are an independent contractor, it’s definitely worth it to get E&O insurance. Even if you work for a company, you should be aware that their E&O insurance covers the whole office, which could potentially be wiped out in one expensive lawsuit. It’s a good idea to have your own E&O insurance, even if your state doesn’t require it.
>>MORE: Real Estate E&O Insurance: Cost and Top 5 Providers
>>MORE: The 9 Best E&O Insurance Companies for Small Businesses
Last Thoughts
Home inspectors are an essential part of the property buying process. If things don’t go the way someone was expecting, they could lash out by suing you. Many states require some form of errors and omissions insurance. Even if yours doesn’t, it’s a good idea to have it. Some home inspectors say it’s not a matter of if you’ll be sued, but when. Prepare for the worst by getting errors and omissions insurance.
