Private building inspectors face expensive damage claims if they’re negligent in their work. You may need professional liability insurance, commercial general liability insurance, property insurance and other business insurance to protect against debilitating financial losses. If you contract with developers, homeowners, homebuilders or government agencies, you typically must show that you have adequate training, licensure and liability insurance.
Having the right insurance isn’t just about meeting contractual requirements. It’s about protecting your business against financial damage from liability claims, property damage, bodily injury and personal injury.
In the course of your work, you can make a mistake or fail to fulfill your professional duties. You can also experience injuries or debilitating illnesses from your job.
Our insurance agents who specialize in construction can help you select the right coverage for your building inspection business. Note that most states require building inspectors to be bonded and carry liability insurance, so familiarize yourself with the legal requirements of your trade in your locale.
Let’s look at some of the most important insurance policies building inspectors typically need.
Commercial general liability
Commercial general liability (CGL) insurance is essential for inspection firms and self-employed inspectors. You may be required to show proof of CGL coverage to obtain a license or do contract work for a builder.
CGL helps pay for claims of injury or property damage that occur on your premises or at a customer’s home or job site. For example, someone might trip over your ladder or slip on the floor in your office building, or you might inadvertently damage someone’s property during an inspection.
Liability claims can be expensive. Without CGL, you could find yourself financially ruined by a single lawsuit. CGL helps with your legal expenses and settlement costs.
In addition to covering property damage and bodily injury sustained by nonemployees, CGL covers personal injury claims. These include libel, slander, copyright infringement and misleading advertising.
CGL premiums are based on your type of business, number of employees and claims experience. Policies are sold in varying levels of coverage known as limits, usually $1 million and higher. A policy with a $1 million limit would pay up to $1 million in claims during the term of the policy (normally one year).
CGL doesn’t cover all the liability risks you may have as an inspector. For example, it doesn’t cover job-related injuries to employees. For that, you’ll need workers’ compensation insurance. Nor does it cover professional liability or employment practices liability. You can purchase those policies separately.
Ask your agent or broker about other exclusions, such as the types of buildings covered and the square footage.
Professional liability insurance
Suppose you miss a flaw in a concrete foundation at a new apartment building. The contractor moves ahead with construction, but later it’s determined that you or your inspector should have caught a crack in the foundation. Fixing the problem will be costly, delay the completion of the project and cause the owner significant losses. You could face an expensive liability claim for errors and omissions or negligence if you haven’t met the standard of care required of licensed inspectors.
Like CGL, professional liability insurance covers your legal defense and settlement costs. Professional liability is also sold with limits starting at $1 million in coverage. Premiums are based on your industry, annual revenue and claims experience.
If your company has employees, you may also need employment practices liability insurance (EPLI). EPLI protects you against employment-related claims such as sexual harassment, discrimination, retaliation and wrongful termination.
Talk to our insurance agents about the various liability coverages that will help protect your business.
You’ll also want to have standards in place to prevent lawsuits. Always have a pre-inspection agreement so you can’t be held liable for items that aren’t in your scope of work. Other best practices include having a safety program, requiring continuing education and certifications, and regularly updating your employee manual.
Property insurance
If you have an office, a company vehicle, and tools and equipment, you need commercial property insurance and commercial auto insurance.
Commercial property insurance covers your business office, including furniture, computers, files, equipment, supplies and tools. Property insurance helps pay for damage from several events, such as fires, lightning, wind, theft, vandalism and water damage from burst pipes.
Commercial auto insurance covers any vehicles your company owns and uses. It can be written to pay for liability, collision and comprehensive costs if your vehicle is damaged or stolen.
Commercial auto insurance also allows you to add employees to your policy so they’re covered when they use your company vehicle. If they go to job sites in their own vehicles, ask about “nonowned auto” insurance. Many personal auto policies won’t cover accidents resulting from work duties.
You can also cover your tools and equipment while they are in transit or at job sites through inland marine insurance. Losses to items situated off-premises are often not covered under standard commercial property policies.
Today, more inspectors are using drones, or unmanned aerial vehicles (UAVs), to remotely view structures and property. If you use drones, you may need liability and hull insurance. Liability and hull insurance will pay for damages to a drone if it crashes. It will also help with liability costs if a drone damages someone else’s property or causes an injury. Your insurance professional can advise you on the best way to cover drones.
Bundled coverage through a BOP
You may benefit from a business owners policy (BOP), which bundles several coverages into a single policy. All BOPs have CGL, commercial property and business income insurance.
BOPs can satisfy most of your basic insurance needs, but they may not offer as much coverage as a stand-alone CGL or commercial property policy. And BOPs don’t include auto, professional liability or workers’ compensation insurance.
A commercial package policy (CPP) works like a BOP but allows you to choose the types of coverage you need. A CPP may give you more flexibility.
Bear in mind that nearly every state requires employers to provide workers’ comp, although sole proprietors are usually exempt. Workers’ comp pays for lost wages, medical care and rehabilitation expenses when an employee is injured on the job.
Let us help you explore your options and create a building inspectors insurance program with the right coverages risk management strategies. Call us today!
