You may think that home inspector insurance costs are just an extra business expense you don’t need. But, as someone who crawls into an unknown old home, have you ever considered the cost of home inspector insurance? no Is there insurance?
Think about it: Insurance costs can make the difference between growing a successful business and harming your career aspirations due to a mistake or injury.
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Home inspectors have a huge responsibility that requires great attention to detail. After all, customers trust home inspectors to provide accurate information about the homes they want to purchase. But even the most experienced professional home inspectors are not immune. Make mistakes, and that’s what insurance is for: preventing expensive claims.
In this guide, we’ll cover everything you need to know about the cost of home inspector insurance, including rates, factors that affect pricing, and tips on how to lower the cost of your home inspector insurance.
Who needs home inspector business insurance?
No one intentionally makes mistakes at work. This is true for most people.
But mistakes happen, and simple oversights can cause financial and legal hardships for home inspectors. This is why any professional home inspector or anyone who provides other general or professional inspection services needs protection in the form of business insurance.
It’s worth noting that in some states, having insurance is a legal requirement to work as a home inspector.For example, according to American Society of Home Inspectors, home inspectors in Nevada must have at least $100,000 in professional liability and general liability insurance. And in Kentucky, licensed inspectors must carry at least $250,000 in general liability insurance.
Regardless of whether your state requires home inspectors to carry insurance, risks still exist, which is why all home inspectors, regardless of location, need to be insured against their most common risks.
Common types of insurance claims for home inspectors
Here are some examples of the types of claims a home inspector may encounter.
scene 1
You are hired to inspect an older house. Aside from a few minor issues that were easily fixed, the inspection went as planned without any major issues, so the client went ahead and purchased the home. While renovating shortly after moving in, the client discovered that the insulation in the attic was actually asbestos, which you had mistakenly identified. The customer sues you for failing to identify the faulty insulation material.
There is no need to put your business into financial trouble due to accidental negligence. professional liability insurance means you may be responsible for the costs of settlement and defense of claims for errors, omissions, negligence, or breach of contract.
Scene 2
While inspecting a wall vent in your home, you slip and fall, hitting a large vase. The vase fell from its stand and was damaged beyond repair. Since the vase is a valuable family heirloom and cannot be replaced, the homeowner sues you for compensation.
Although rare, accidents can occur during a home inspection, resulting in unintended damage.The good news is that if you have general liability insurance or business owners policy, your home inspection business is covered for any property damage or personal injury claims.
Scene 3
Your home inspection business falls victim Ransomware attack.In order to regain access to your business data, you must pay the ransom within a deadline. You are advised that failure to pay the ransom on time will result in the disclosure of confidential customer information.
All businesses face the risk of cyberattacks.While many small business owners don’t think they will be targeted in a cyber incident, Verizon data breach investigation report Small businesses were found to be the main target of cybercrime, accounting for 43% of all data breaches. Cyber liability insurance, your home inspection business is protected from the costly consequences of a cyber incident. Cyber liability insurance typically covers costs associated with notifying affected customers, victim credit monitoring, investigating the cause of the incident, paying ransoms, and civil damages.
How much does home inspector insurance cost?
Understandably, cost is a key factor when purchasing insurance. Here are the average costs of home inspector insurance for basic coverage. However, there are several factors that affect the cost of an insurance policy (we’ll discuss this later), and your business may pay more or less than what’s included below.
professional liability insurance
also known as Errors and Omissions (E&O) Insuranceprofessional liability insurance is vital for any home inspector because it protects your business from claims of error, mistake, breach of contract, or negligence.
arrive consultant smith, the average cost of professional liability insurance is approximately $1,000 per year. The amount is based on small businesses with less than $500,000 in revenue and a limit of $1 million.
general liability insurance
Given the nature of a home inspector’s job, when an accident occurs, it’s likely to happen on someone else’s property. This is why all home inspectors need general liability insurance, as it covers third-party property damage, bodily harm, or personal injury.
The average cost of a small business general liability policy is About $600 per year.
Business Owner Policies
If you want to purchase both general liability and commercial property insurance, it’s worth considering Business Owners Policy (BOP).
BOP is a core package of three cost-effective insurance policies. The general liability component covers risks such as third-party injury, while property and business interruption coverage protects your business’s property (building, equipment, etc.) and loss of revenue if: You must temporarily close the business.
The cost of the BOP is approximately $1,000 per year.Purchasing personal general liability and property insurance may mean Pay about 10% more Compared to BOP.
Cyber liability insurance
Considering that cybercrime will Global businesses will lose $10.5 trillion annually by 2025cyber insurance is a must for any business. Cyber liability insurance Covers financial losses caused by data breaches and other cyber-related incidents.
according to a AdvisorSmith’s researchAs of 2021, premiums for cyber insurance range from $650 to $2,357, with the average annual cost being $1,589 (or $132 per month).
commercial auto insurance
Since most Personal auto insurance does not cover business-related accidents and incidentsyou will want commercial auto insurance Commercial auto insurance provides financial protection for you or your employees while you’re on the road for an inspection, and it also covers losses due to theft, vandalism, certain weather events, and collisions if you or your employees are at fault in an accident.
The average cost of small business commercial auto insurance is approximately $1,916 per year (or $160 per month)but this coverage varies significantly.
Additional coverage
What affects home inspector insurance costs?
As we mentioned before, there are many factors that determine the cost of home inspector insurance. Understanding the factors that affect the cost of home inspector insurance will help ensure that you provide accurate information to your insurance company to obtain a quote.
Place
Where you do business can affect the cost of insurance. This is because requirements and risks vary from location to location. Businesses in states with the lowest coverage requirements may pay more for insurance.
Annual income
Be prepared to show the insurance company proof of your income for at least the past three years. Revenue has a direct impact on insurance premiums: the more revenue your business brings in, the greater the potential risk (aka litigation) you face.
Number of active employees
Not surprisingly, the more employees you have, the more money you need to spend to insure them all. Not to mention, the more employees you have, the more likely it is that one of them will make a mistake.
years of experience
Typically, experienced professionals and reputable companies will pay smaller premiums because insurance companies often view years in business as a positive reflection of service quality.
Claims History
This is a fairly obvious factor. A business that has made many claims in the past will pay more for insurance than a business that has never made a claim.
insurance limit
Coverage limits are the most an insurance company will pay for loss or damage covered by your policy, and they can significantly affect your premiums. The greater your insurance coverage limit, the more you’ll pay.
How to reduce home inspector insurance costs?
Everyone likes to save money anytime and anywhere. Just because insurance is critical to your home inspection business, doesn’t mean it should be a financial drain. There are ways to help keep home inspector insurance costs reasonable while maintaining basic protections.
Reduce your risk
The best way to reduce the cost of home inspector insurance is to prioritize risk management. risk management plan It is a proactive way to prevent claims and losses from occurring. Insurers often reward businesses that focus on risk management. Plus, it’s good for business. Investing in safety measures, regular property maintenance, and employee training is how your home inspection business operates to reduce risk.
Paying your insurance premiums up front is an easy way to save a lot of money. Most insurance companies offer discounts if you pay for your annual home inspection insurance up front rather than monthly.
Increase deductible
This is a tough question. Sure, raising your deductible can lower the cost of your prepaid home inspector insurance, but that just means you’ll have to pay more out of pocket if something unexpected happens. Raising your deductible should be your last resort to lower the cost of home inspector insurance. If you do go this route, make sure you don’t choose a deductible that you’ll struggle to pay if you file a claim.
Eliminate unnecessary insurance
Consider the coverage your home inspection business actually needs.The keyword is need. Take the time to carefully research your insurance requirements to ensure you get the right amount of protection without paying too much.
The cost of no home inspector insurance is a major consideration when dealing with your business expenses. While insurance is an added expense for your home inspection business, it will end up costing you more when something inevitably happens that puts your business in financial straits.
Want to learn more about home inspection business insurance? Contact our expert brokers to discuss a policy that suits your business needs.
