Study Session – Insurance for Home Inspectors 101
We hope that you enjoyed this week’s webinar. Thanks again to Kim Smith for taking the time to present to us!
As Sal mentioned in the webinar, due to time constraints we weren’t able to do a Q&A for Kim. We compiled the list of questions that came in and Kim and Sal have responded. Please see below:
Q: If somebody has another license like mortgage broker and pays insurance, can it be merged?
A: No, the insurance companies will not mix the two operations.
Q: Is any possibility to access some real reports for training purposes?
A: Unfortunately not, due to privacy issues. But we do hope to be running another report writing study session very soon.
Q: Are there advantages to having personal training, i.e. ladder training to save on premiums? GPS on high value equipment? Drone coverage?
A: Training needs to be done on all operations offered. It is really difficult to insure if they do not have training. Premium is not discounted on training.
Q: Inspectors are not specialists, so how do inspectors defend themselves?
A: You will need to note in your report that a qualified contractor or professional will need to review if you are not specialized in that area.
Q: Is there any way to write up a waiver your customers signs before the inspection so you can not be sued or a claim against you
A: No – your contract is in place of the waiver. It outlines what you will inspect and what you cannot inspect following the Standard of Practice.
Q: Is the lawyer’s fee part of the insurance policy fee if you receive a statement to proceed?
A: Legal fees are covered under the policy.
Q: Do the premiums change as we get more experienced in the home inspection business with few claims made against us. Or is it a case of the rates are set?
A: Usually rates are set for the one year term. At the renewal of our program, rates are always looked at and decided upon the performance of the program and the insurance industry as a whole.
Q: Do all the insurances apply for a business or individual? Meaning we are 2 inspectors under same business name.
A: You both would have coverage since you are on the same policy inspecting on behalf of the one company. Company is insured as well as the Inspectors.
Q: How long does a customer have to make a claim on your inspection?
A: 2 years or 2 years from the discovery. We usually see them within the the 2 years, or seasonally.
Q: How often do inspectors get sued?
A: Not often. They may have a complaint from their client, but usually the complaint is resolved with our Adjuster helping.
Q: How much is insurance typically?
A: Typically we are seeing $3,400 – $4,200 depending on the limits purchased and the services that the Home Inspector is offering. Plan on one inspection a month to cover your insurance costs in your budget.
Q: Can you buy an a per-inspection insurance policy?
A: No there is no insurance company that offers per inspection.
Q: Why can’t everyone sign a release?
A: If a home inspector is refunding an inspection fee, our Adjuster will have a Waiver prepared that the inspector is released from any other allegations or claims.
Q: How does the insurance premium work if I am working part-time vs full-time?
A: It is the same premium and same policy.
Q: Is there a possibility where a home inspector is charged $1 million? Any events in the past?
A: No I have not seen that.
Q: Does this policy only cover at site, or while going for a job or returning from a job due to an event?
A: The policy is only covering for the Home Inspection that you completed at the said property.
Q: How about a privacy claim from neighbour due to use of drone?
A: We have not had a claim.
Q: How long the past photos or any reports to be kept in archive?
A: You need to keep them all. Software reports are the best as they store them for you, and easy to retreive if you need to access them.
Q: With your experience how much time does a new Home Inspector need on average to be confident enough for independent inspections?
A: Really case-by-case, although typically 50-100. As we say, always make sure you’ve got a procedure for inspecting your comfortable with and can replicate – getting into a routine/checklist will help a lot.
Q: Does a single E&O policy cover all inspectors in a firm or do they need their own?
A: If the inspectors are all inspecting under the one company name, they are all on the same policy and insured for their inspections.
Q: Does a limit of liability get split between claims or is the amount the same for all claims?
A: The $1M liability limit for example per claim is not split. You can claim up to $1m at one time. The Aggregate amount example $2m is reduced after the claim is settled. Example – if you had a $500,000 claim and that was the final cost for expense/defense and settlement the aggregate amount left would be $1.5M ($2m less $500,000).
Q: What is the biggest award you have dealt with?
A: The largest claim that we have had on our program was a settlement of $250,000 – typically there is no settlement to the Home Inspectors clients, and therefore no deductible paid.
Q: So what happens when you retire? Do you need to keep buying coverage?
A: No when you decide to retire, we can add an endorsement to the policy at that time that is going to cover your prior inspections. We can add the Retirement endorsement at the time of retirement. If you are just stepping away from the industry for awhile, you would want to purchase the Extended Reporting Period which would cover your prior inspections.
Q: Is it possible to buy E&O on an occurrence basis form?
A: No E&O is only sold on a Claims Made wording.
Q: Which insurance companies offer this coverage?
A: It all depends on the risk that they are insuring. Some insurance companies are not wanting to insure Home Inspectors and do not have the expertise in E&O coverage.
Q: What is the typical loss ratio for E&O coverage?
A: We do not have many paid losses on the program.
Q: For a new business owner how would you suggest to go about getting a contract started to present?
A: There is a ‘starter” contract in Horizon but we do recommend discussing with a lawyer.
Q: If you say something during the inspection that you believe to be true at the time, but then realize its wrong after the inspection…what is the best way to communicate that to the client? Phone call or email before sending the report?
A: Call the client before publishing the report and discuss it.
Q: Can the premium be auto-paid through a bank?
A: Yes, we have a monthly payment option that most of our Home Inspectors use.