As a property inspector, there are many insurable risks you are likely to come across in your professional engagements. The sad reality is that society is wildly litigious today and an inspector is likely to be sued every once a while, regardless how good he or she is. It is therefore not a question of if the inspector will get sued rather it is a question of when. Below we look at insurance covers recommended for property inspectors.
Errors and Omissions Insurance
E&O is an insurance policy that protects the inspector from covering the cost of defending a suit against negligent inspection and pays the damages if the inspector is found to have been negligent by a court of law. To understand this better, take a case where an inspector failed to notice that the roof in a property he was inspecting leaks. This is because the inspector did his work in summer and there was no way to know that the roof leaks. Come spring, the property is pounded by rain and water leaks and causes electrical equipment in the house to get damaged. The client then sues for negligence. E&O insurance ensures that the inspector gets legal representation where three different outcomes are possible:
- the case can get settled out of court, with the insurance company paying up,
- the case can go to trial, and the inspector wins or
- the case can go to trial and the inspector loses and is ordered to pay damages, which the insurance company pays
General Liability insurance
GL is a cover that is taken out to protect an inspector against a suit brought on him or her for accidental damage of a client’s property when on the job. Take an example where an inspector is on a ladder inspecting the ceiling and the ladder comes crashing down on the client’s new HD TV. The client then wants to have his or her TV replaced. Instead of having to reach into his or her pocket to pay for this, the insurance company under which he or she took out a GL policy will pay up.
GL can also cover against bodily damage caused by an inspector over the course of his or her work. A good example is where the inspector’s camera slips from his pocket while he is inspecting a balcony and hits a child on the lawn, causing a gash on the child’s head. This type of bodily harm suit more often than not culminates in a big dollar damages award. To avoid this, a GL insurance company will come in and do its best to settle outside court if they feel the case will be lost. The inspector pays for neither the damages nor the cost of the suit.
That said, it is important that a property inspector knows that no two insurance policies are identical; he or she must read the terms of an insurance contract to know exactly what he or she is insured against. Some contracts will for example only cover the cost of a suit and not the damages awarded. Many policies are also voided in the event the inspector’s case becomes a criminal trial.