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What is home inspector insurance?

When someone purchases a home, an inspector plays a crucial role. Whether it is a first-time purchase or the next step on the property ladder, prospective buyers should hire a home inspector.

As a home inspector, you are excellent at seeing damage and issues in homes and highlighting them to clients, but even you can overlook an issue. In such a situation, a small oversight can lead to the buyer losing thousands of dollars. Plus, depending on the nature of the issue, the potential for bodily injury or property damage may also exist.

Home inspector insurance covers those perils, providing a comprehensive policy package that offers protection for the unique risks your profession poses. Taking out a policy can protect you, your clients and your business. That's why home inspector insurance should be part of your risk management structure.

Who needs home inspector insurance?

Home inspector insurance is essential for professionals in the home inspection industry. This includes:

• Licensed home inspectors: Individuals who conduct inspections of residential properties to assess their condition and identify any potential issues.
• Inspection companies: Businesses that employ multiple home inspectors and offer inspection services to clients.
• Freelance inspectors: Independent contractors who provide inspection services on a freelance basis.
• Specialized inspectors: Inspectors who focus on specific areas, such as mold, pest or structural inspections.
• Trainee inspectors: Individuals in training who are gaining experience in the field and may need coverage for liability during their training period.

What does home inspector insurance cover?

Home inspector insurance primarily covers general and professional liabilities. General liability insurance protects against bodily injury and property damage that might occur during an inspection. For example, if a client trips over your equipment and gets injured, this policy covers their medical expenses and your legal fees.

Professional liability insurance, also known as errors and omissions (E&O) insurance, covers claims related to professional mistakes or oversights. Let's say for example that you miss a significant issue during an inspection and the client takes legal action. Professional liability insurance would cover the defense costs and any settlements.

What insurance coverage add-ons are recommended for home inspectors?

Alongside general and professional liability coverage, you may want to consider the following add-ons for your home inspectors insurance:

• Commercial auto insurance: Your personal auto insurance policy won't cover you for events that occur while using your vehicle for business purposes. As you travel from property to property, you will encounter risks, like collisions, property damage, third-party injuries or auto theft. Bundling commercial auto insurance with home inspector insurance gives you proper cover to handle unforeseen issues involving your vehicle.
• Tools and equipment: Business items valued at more than $1,500 are classified as equipment, while items under $1,500 are considered tools. This add-on protects both assets from damage and theft.

These add-on options are popular among Canadian home inspectors, but the list of potential extensions is not exhaustive. There may be other add-ons applicable to your specific business. It's always worth discussing ways to extend your coverage when speaking to an insurance provider who has offered you a quote.

How much does home inspector insurance cost in Canada?

Like all types of insurance, the cost of home inspector coverage depends on your individual circumstances. A standard policy with personal and professional liability coverages can come with premiums ranging from $2,000-$5,000 per year.

However, this range is only reflective of a typical home inspector insurance policy in Canada. Many home inspectors will have policies that are cheaper or more expensive. It really boils down to the specific needs and characteristics of your own business.

What factors determine the cost of home inspector insurance rates?

Several key factors influence the cost of home inspector insurance rates in Canada:

• Business revenue – If your business generates high income, there is more at risk during lawsuits. Insurers will consider potential settlement payouts and high-revenue home inspectors may have higher rates.
• Type of properties you inspect – Inspectors who generally check more expensive or risky properties will will pay more for insurance.
• Claims history – Those who've been claims free for several years may receive discounts for demonstrating that they're lower risk.
• Limits and deductibles – The amount of coverage you want and the amount of money you're willing to pay out of pocket when it's time to make a claim will both have a significant impact on your premiums.

How does home inspector insurance work?

Home inspector insurance can protect you in several scenarios. The following list offers some practical examples of when having a home inspector insurance policy will prove invaluable to your business:

• Client claims for missed defects: If a client files a claim stating you overlooked a significant defect during an inspection your insurance can cover legal fees and any settlements if the claim proves valid.
• Property damage: If an accident occurs during an inspection, such as damaging a client's property (e.g. breaking a window, causing water damage, etc.), your insurance can help cover the repair costs.
• Errors and omissions: If a client believes your report was inaccurate or incomplete and claims damages based on that report, your coverage can protect you against legal costs and settlements related to errors or omissions in your service.
• Breach of contract: If a client claims you failed to meet the terms of your contract, leading to financial losses for them, your insurance can assist with the legal costs.
• Personal injury claims: If a client or third party is injured during an inspection (e.g. they trip over your equipment), your insurance can help cover legal expenses and claims for damages.

How to get the cheapest home inspector insurance quote

Securing affordable home inspector insurance doesn’t mean sacrificing coverage. Here are some tips to help you get the cheapest quote:

• Compare quotes – Get quotes from multiple insurers to find the best rate for your needs.
• Bundle policies – Many insurers offer discounts for bundling multiple policies, such as combining general liability and professional liability insurance.
• Increase deductibles – Opting for a higher deductible can lower your premium. Just make sure you can afford the out-of-pocket expense if you need to file a claim.
• Maintain a clean claims history – Avoiding claims can help you secure lower premiums over time. Implement safety measures and best practices to minimize risks.

By following these tips, you can find an insurance policy that provides adequate coverage without breaking the bank.