How to Get Home Inspector E amp O Insurance
It's amazing to think that so many home inspectors don't have adequate coverage on their insurance policies. The average home inspector doesn't realize that there are many things that are not covered, or only partially covered by their home inspector's policy. When you become a home inspector, it is important that you realize that you have the right to bring up these exclusions and make your clients aware of them.
What is E & O insurance? E & O insurance is a type of business interruption coverage that provides protection for clients when they encounter an unexpected and unforeseen event that causes the home they are inspecting to be unoccupied. If the home inspector is unable to complete his work on the property he is working on, he has the right to demand replacement cost coverage from the home inspector's insurance company. In the past, the insurance companies only offered a partial coverage to home Inspectors who were practicing self-employed contractors. However, underwriters have realized that having an independent contractor on staff is just as risky, and therefore they have expanded their policies to cover any situation where the home inspector is no longer on site to supervise the work. If you choose to purchase this type of coverage, you will want to be sure and fully understand the limitations.
What are some of the common scenarios that would require a home inspection with E & O coverage? There are many situations where it may be necessary to bring up the subject of replacement cost coverage with your client - whether it is because the inspector discovers moisture problems, or other issues. There are also cases in which a home inspector may have to return to a previously occupied structure because the original tenant no longer qualifies as a qualified individual under the rental agreement. In these types of cases, the insurance company will require the home inspector to purchase E & O coverage - and they will insist that it is coverage - not a replacement policy.
So, what are the limitations of E & O insurance? First of egginsurance , it is important to realize that coverage is not available for every type of situation that occurs - it is simply not a policy which will automatically encompass every type of condition or problem that could possibly occur. Also, the nature of the work performed by the home inspector - namely the fact that it is typically "specialized" - means that there will be instances where the inspector will not need to purchase additional coverage. For example, if there is leakage in the roof but it has not caused structural damage, the inspector's report would likely contain sufficient information to justify bringing up the matter with the owner or the building owner. On the other hand, if the water leak had resulted in structural damage, the inspector would most likely recommend that the water is dried out and then replaced.
When looking at E & O insurance, you'll probably find that different levels of coverage are available. For example, the highest level of coverage is often referred to as comprehensive coverage - which covers the most potential problems with your property, with the proviso that some of these problems might not even require calling in an expert immediately. Additionally, comprehensive coverage might cover things like subsidence (laid low), but might also cover damage to the building itself, such as walls and ceiling, as well as other property structure. Limited coverage - usually called specialty coverage - only covers the most common defects that might occur on your home, and may only cover a specified number of issues. Finally, the level of coverage offered under the miscellaneous category may depend on the regulations governing your state's home inspection requirements.
So, what should you do when you get a home inspection report from your home inspector? In most cases, most states require that your home inspector performs an inspection before issuing a warranty or guarantee for the house. In these cases, the inspector will likely recommend that you either purchase the necessary warranty coverage, or to engage the services of a professional home inspector who can perform the same service for a slightly higher fee.
What about in-home warranties? Purchasing the necessary home inspector e & o insurance coverage will typically be required if the home inspector finds a problem with the structure of the house. Some states allow you to add additional coverage beyond this requirement by signing a contract. Typically, in-home warranties will cover anything from carpet damage to cracked foundation walls. Additionally, if you're paying for the coverage through a mortgage, the bank's warranty will probably cover it, too.
The best way to avoid having problems is to make sure your home inspector is trustworthy. Don't be afraid to ask for references. As long as the home inspector has a good track record and hasn't recommended the warranty coverage that you're thinking about purchasing, it should be safe to move forward with the purchase. If you find yourself needing a home inspector e & o insurance policy shortly after purchasing a new house, it's time to start shopping around for home inspectors and their appropriate home inspector e & o insurance.
