OK… I’m just starting out. I’m getting ready to start making decisions about insurance. What do you all have to say about E & O insurance and liability insurance? Is E & O necessary? Can liability insurance be purchased on a per-inspection basis? I believe E & O can. Being new to the business, I’m sure I will not be doing enough inspections per month to justify a monthly insurance cost. Any thoughts or suggestions?
Thanks.
p.s. A question for Bob Elliott if you’re reading this (and I’m sure you are) how is Chicago for home inspection? My wife and I are considering moving to Chicago some time in the future and I’m curious about working in that city. Do you have to drive for hours to get to inspections? Do you omit certain areas? Is the business good? Etc, etc. Thanks.
Liability insurance is very cheap. I’m paying about $200 per year for $1,000,000 coverage. As for carrying E&O, I don’t. The last CE class I was at, the proctor took a poll and asked how many carried E&O. Out of approximately 95 people, only 9 carried it. Make sure that you are thorough with your inspections and have the ability to cover yourself ( PI agreement, lots and lots of pictures, documentation, etc.). Some inspectors view the coverage as a necessity, some view it as a target on their backs. You will get a lot of opinions on this matter. If you feel comfortable (money-wise), go for it. There are plans that allow you to pay on a per-inspection basis.
As for Chicago, there are still plenty of properties being bought here. Many inspections, as well as inspectors in the area. There are a lot of good INACHI guys that are around here. A lot of them willing to help out whenever possible, or to just B.S. I’m up in the northern burbs and it takes me about 90 minutes to get to the far southern burbs if needed. Downtown, figure on maybe 30-40 minutes.
Some areas of the U.S. are known to the insurance companies of having higher liability than other. In other words, some parts of the U.S., people are more likely to sue than others. If your in or moving to a location where people like to sue, E&O insurance is likely a wise choice. The area I’m in is a higher liability than where I lived in Kentucky - my insurance rates reflect it.
I would also look into a local lawyer for those cases that are just silly. I had two cases where I gave it to my local lawyer. Both cases were dismissed and only cost me less the $2000 each. (A lot cheaper than sending it to my insurance company.)
I hear that some take care of the problem themselves. While there is a chance that this can be done, there are times when your past client is being unreasonable and no agreement can be made, or you just receive a letter in the mail saying that you’re being sued. In these cases, there isn’t much you can do but get a lawyer or submit it to your insurance company.
I would also like to point out that you wrote that you are new to this profession. While you might have come from a trade, you are not experienced as a home inspector. There is always a learning curve and the chances of you getting into a lawsuit is much higher during that fist couple of years.
In short, I would get insurance, especially in the beginning. This is a serious business and needs to be treated and respected as one.
I know a home inspector that has General Liability insurance only but pays $800 per year for a $1,000,000 coverage. What company do you get yours from?
Sorry, I just looked it up. It’s $300.00 per year for $1,000,000. I go through Country Financial. They do stipulate that I become a member of the Farm Bureau, which is $25.00 per year. Oh the sacrifices…
Good question John, I was wondering the same. Now that you are looking into insurance I assume you are about ready to begin doing inspections. I’m new to this also and was curious if and where you did your training? I want to put my time and money to good use so I’m looking for suggestions.
Kevin… I got my initial training at Allied Schools online. They were endorsed by ASHI. I figured it would be a good course. After I was finished with the course and passed my exam, I felt like there was a ton I still needed to learn. Not a ringing endorsement. I feel like I learned so much more with NACHI’s free courses plus a few advanced courses thrown in there. (HVAC, Electrical, etc.) That’s about all I can suggest. Plus… lots of practice inspections. That’s where I am right now. I’m getting close… but I still want to do a bunch more practice inspections.