Errors and omissions (E&O) is the insurance that responds to claims made by a client for services that you provided, or neglected to provide, that resulted in a monetary loss to the client. In the medical arena, it is often called malpractice insurance. For lawyers, accountants, architects or engineers, it is sometimes called professional liability insurance. By any name, it covers you, your company and your employees for errors (or omissions) that you or they are alleged to have made in the course of conducting your home inspection business.
E&O policies cover judgments, settlements and defense costs. Even if the allegations are without merit, the cost of defending your professionalism can be daunting. As an example, the Congressional Budget Office has determined that in 2002, the average unmeritorious medical malpractice claim - a claim that did not result in a payment to the claimant - cost $22,000 to defend.
In short, E&O coverage provides protection for you, your company and your employees in the event that a client of yours alleges that an error or omission on your part has caused a financial loss for the client regardless of whether or not the allegation has merit.
If you have a professional liability exposure, that is, if you are performing a professional service for a fee, you should very seriously consider carrying errors and omissions insurance. While the vast majority of professional liability claims are unmeritorious and professionals prevail in over 90 percent of the cases that reach a verdict, the cost of vindicating their professionalism is enormous.
This question is increasingly becoming academic as many jurisdictions now require home inspectors to carry Errors and Omissions Insurance as a condition of holding a home inspector's license. The following states require a home inspector to have Errors and Omissions Insurance as a condition of holding a license: Arizona, Massachusetts, Mississippi, Nevada, New Jersey, North Dakota, Pennsylvania, Tennessee, Texas, and Washington.
In addition, many franchisors, such as Home Team, HouseMaster, National Property Inspections, USInspect, and Pillar To Post require their franchisees to carry such coverage.
Moreover, most sophisticated Real Estate Brokers, Relocation companies and real estate attorneys will not refer a client to a home inspector who does not carry Errors and Omissions Insurance with a Referring Party Endorsement.
This endorsement provides coverage to a referring party - any referring party, not just a real estate agent - for any claim that alleges that the referring party negligently referred business to the insured home inspector for home inspection services.
No. The endorsement is automatically included at no additional charge.
Yes. You can obtain coverage regardless of your tenure in the profession.
There are three limit options available: $1,000,000; $500,000; and $250,000. Many states have minimum limits of $500,000, as do many franchisors and many referring parties, such as, real estate agents, relocation companies and real estate attorneys.
Yes, providing that there are no pending claims against you.
Yes. There is no premium adjustment for adding an inspector mid-term. Neither is there one for dropping an inspector mid-term. Premiums are based on the number of inspectors at the beginning of the policy term.
If you have never had coverage or do not presently have coverage in force, you will receive a binder via email generally within 24 hours of receipt of your completed application and payment and a policy will be issued within a few days.
If you are currently insured and are switching your coverage to Elite MGA, typically policies are issued within a few days of receipt of your completed application and payment.
You will be covered for any claim presented after you switch insurance companies, if you have had continuous E & O Insurance in your name from the date of the inspection that gave rise to the claim. This is known as Prior Acts Coverage.
For example if you have had continuous E&O Insurance in your name since 1/1/2002, that would be your prior acts date or, retroactive date, as it is sometimes called. Your current Insurance carrier will respond to a claim for work you performed from 1/1/2002 forward, assuming you have had continuous E&O Insurance with no lapses in coverage.
Prior Acts Coverage is only available to Home Inspectors who have maintained continuous Errors & Omissions Insurance in their name. Elite MGA will need a copy of the Declarations Page of your prior policies together with the completed application to determine if you are eligible for prior acts coverage.
No. Prior Acts Coverage is only available to insureds who have had E & O Insurance continuously in force.
Approximately sixty (60) percent of all claims against home inspectors are brought within one year of the date of the inspection. Ninety (90) percent are brought within two years. Claims brought after two years are generally completely ridiculous.
An Extended Reporting Period, popularly known as Tail Coverage, extends the time in which you can report a claim. It does not extend coverage, but only the time in which you can report a claim for work done prior to the expiration date of your coverage and, if you have been continuously insured, subsequent to your Retroactive [Prior Acts] Date of your coverage.
If you retire or stop practicing, it is wise to purchase an Extended Reporting Period [Tail Coverage].
