Why do I need an Inspector with both Professional and General Liability Insurance?

General Liability provides coverage while the inspector is performing the inspection and at his office. The Inspector has two major exposures while performing the inspection: (1) Property Damage-- the inspector's ladder falls over and breaks the glass in the homeowner's front door. (2) Bodily Injury -- The inspector's ladder falls over and hits the homeowner in the head and he suffers a permanent injury.

Professional Liability provides coverage for actual or alleged errors and omissions in the Inspector's report. Again, two major exposures: (1) Property damage -- the inspector allegedly missed a leaking roof, (2) Bodily Injury -- a basement stair riser is several inches different than the rest and the inspector allegedly missed it in the report. -- the buyer's wife falls down the steps and suffers a serious injury.

Are separate limits for Professional and General Liability important?

If an Inspector has one limit for both typed of insurance, he is exposed to using up the policy aggregate, a large Professional Liability settlement, for one claim, and there is little insurance left for a General Liability claim.

Occurrence Coverage verse Claims-Made Coverage

Occurrence Coverage: has been the traditional form of coverage used to provide liability insurance. The policy provides coverage for a covered act which takes place during the policy period and for 4 years thereafter. If the Inspector cancels it, or forgets to make a payment and is canceled. The Insurance company no longer writes or renews the policy, the inspections done while the policy was in force are covered for 4 more years.

Claims-Made Coverage: was introduced as an alterative form of coverage and as a way to keep liability insurance available. Under a claims-made policy, coverage is provided for claims which are made and reported to the insurance company during the policy period. Should the Inspector miss a payment or the policy is canceled for any reason, all coverage is lost. This includes the coverage for all previously insured inspections.

Be sure your Inspector carries the correct type of insurance that protects both you and your investment today and tomorrow.

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