IS THE HOME INSPECTOR PROPERLY INSURED?
MANY HOME INSPECTORS ARE PLACING YOU AT RISK
Florida home inspectors are required to have a minimum of $300,000 in General Liability insurance as a condition of maintaining an active license. Unfortunately, that is all many inspectors carry. General liability policies only cover damage to the property caused by the home inspector. If the inspector somehow falls through the ceiling, causes a flood in the laundry or breaks the window, the inspector would be insured to make needed repairs. That is certainly important, but there are far more serious concerns which are often overlooked by the buyer, the seller and the realtor.
I have worked with many realtors and we are privileged to be included on many realtors referral list for home inspection services. Yet, I can tell you, not one single realtor/brokerage ever asked for my insurance coverage! They just generally do not think in those terms, yet they should. It goes almost without saying, I’ve never had a buyer/seller request my insurance coverage either! Why should you be concerned with this? Because, in the absence of insurance, civil litigation gets personal. Let’s examine a couple of possible scenarios for discussion.
A. While backing out of the driveway, the inspector fails to see a child behind his truck and the child is ran over resulting in severe injury/death. The home inspector does not carry commercial auto on his vehicle but he does carry personal auto coverage. The home inspector does not have any insurance to assist with medical claims or death benefits. If a home inspector is using a personal vehicle to deliver commercial services, he is not insured. Now, the parents of the child will be facing extreme expenses and most likely, their attorney will be seeking justice/compensation from everyone else involved to include the owner of the property, the referring realtor/brokerage and their insurance carriers. This situation happens all too often as we are aware.
B. The inspector fails to disclose a major defect in the home which should have been reasonably detected by a professional. The buyer discovers they have thousands of dollars in repair costs after closing. These type repairs are not covered by a simple home warranty. If the home inspector does not have Errors & Omissions insurance, there is no coverage to compensate the buyer. Many home inspectors simply earn a living and there may not be any assets from which the buyer can recover damages. A General Liability policy does not cover errors & omissions made by the inspector; it only covers damages to the property made by the inspector!
C. The home inspector is not licensed as a Mold Assessor in Florida ,yet he promotes mold sampling through a third party mold laboratory. The inspector sells the buyer on the benefits of a mold sample to make sure there is no mold in the home. The laboratory interprets the sample and provides an “opinion” of the amount/type of mold present in the sample and advises the mold is “elevated.” The inspector does not have any formal training in mold or indoor air quality and is not qualified to interpret the results other than to pass the information along. The buyer is alarmed and decides to not purchase the home. The Seller and the realtor have just lost a sale and the buyer has to start over in their search for a home. The home inspector collected a couple of hundred bucks. The Florida mold licensing law has strict criteria one must meet to qualify to take the examination to obtain the state Mold Assessor license. A background in home inspection does not qualify a home inspector to conduct mold assessment. Home inspectors are “skirting” this law by using the 10 square feet rule (says if mold affects less than 10 sf, no license is required). This law was designed to reduce insurance claims and to allow the homeowner the right to clean up/repair minor mold from leaking pipes, etc. It was not intended to allow home inspectors to conduct air sampling for added revenue. Unfortunately, with the assistance of a couple of mold laboratories, they are skirting the intent of the law.
A licensed Mold Assessor must maintain $1 million in Errors & Omissions insurance as a condition of their license. Home inspectors do not carry this insurance and they could not get it even if they wanted because “they are not licensed to conduct mold assessment”! So, what happens if the Seller decides to hire a properly licensed Mold Assessor to verify the claim made by the home inspector? For arguments sake, let’s assume the Mold Assessor failed to find any basis for the claim of “elevated” mold and, in fact, showed where the home inspector failed to adequately confine the area tested against outside influences (imagine taking an air sample while the inspector, the realtor, the seller and the buyer are all in and out of the house). Does the Seller have a legal claim against the home inspector, the buyer and even the Realtor because the realtor “referred” the home inspector? Quite possibly. Is the home inspector insured to protect the interests of the other parties? Absolutely not.
D. The home inspector leaves his voltage meter laying on the counter. A child has watched him test the outlets and likes seeing the lights go on. The child takes the tester to a 240 volt outlet and unfortunately, gets electrocuted and is required to go to the hospital. The inspector carries $300,000 in general liability – is he insured? Yes, the general liability policy should assist with the hospital expenses however, as we know, the hospital bills could easily surpass $300,000 especially if the child requires major surgery, prosthetics, therapy or long term care.
Florida does not require home inspectors to carry commercial auto or errors & omissions insurance and therefore, many small home inspectors do not. It is expensive and many inspectors simply can’t afford it or have made the decision to not purchase it. They are exposing you to the claim and the expense.
If a home inspector promises you a complete home inspection, at a price which is drastically under most qualified inspection firms, you probably should understand they will not have adequate insurance protection – they can’t afford to pay for it and therefore you are assuming the risk. How much risk are you willing to take on for $100 or so?
Don’t be misled by marketing gimmicks promising leak free roofs, no mold guarantees, we’ll buy your house back and free alarms – these promotions generally serve to hide inexperience and qualifications by a new inspector or a large firm who is simply dealing in low fee, volume inspections. Understand the real qualifications and insurance coverage offered by the inspector – that is what matters.
If you need a home inspection in the greater Orlando or Jacksonville metro areas, we guarantee you will find our qualifications and insurance provides the protection you need.
Call us toll free at 855-932-3784.
The Building Inspector offers qualified and insured home inspections throughout the greater Orlando and Jacksonville metro areas including Keene’s Pointe, Windermere, Isleworth, Winter Park, College Park, Alaqua, Markham Woods, Lake Nona, Winter Springs, Oviedo, Bear Creek, Green Cove Springs, Middleburg, St. Augustine, Fleming Island, San Marco, Mandarin, Ortega, Avondale, Arlington, Riverside, Ponte Vedra, Eagle Harbor, Pace Island and Jax Beaches.