Residential homebuyers who wish to avoid unpleasant surprises after purchasing a new abode typically turn to home inspectors to thoroughly inspect a property before signing on the dotted line, and for a good reason.

Skipping a home inspection could result in much regret after the purchase, costing a homeowner thousands of dollars in unplanned expenses. For example, if they weren’t aware of the cracks in the building’s foundation that could lead to the basement flooding.

The frenzied buying action of the formerly red-hot housing market prompted many homebuyers to not bother getting an inspection of the place they bought – it’s estimated less than 25% of all home sales in Ontario in 2021 had a home inspection. Although the home inspection industry may be facing a downturn presently, the recent formation of a national industry coalition by the Canadian Home Inspectors for Consumers association aims to educate the public on the importance of home inspections to help protect them from unknown risks.

A home inspector checking a client's house for damage

Likewise, home inspectors face a significant amount of risk. For instance, there may be something they miss during an inspection that winds up costing a homeowner big bucks. That mistake can lead to an irate homeowner launching a lawsuit seeking compensation, which is why a home inspector insurance policy that includes errors and omissions (E&O) coverage is vital.

The Risks Home Inspectors Face

Even if you do everything right, home inspectors may still face the possibility of allegations of negligence or a lawsuit. From foundation defects and roof-related issues to undetected water damage, the list is extensive.

Buying or selling a home can be emotional, and since home inspectors help determine the value of a dwelling which may affect the purchase of a home, blame often falls on the inspector when unforeseeable issues crop up.

Home inspectors can and do get sued for the inspections they do. In the residential real estate market, many buyers believe that a pre-purchase home inspection guarantees the home is free of defects. According to industry statistics, 12% of every 1,000 inspectors will have a claim within the first five years of business. 

Only Ontario and British Columbia require home inspectors to be insured, but the risk of claims exists across Canada. Whether or not you live in a province that requires the profession to carry insurance, a home inspector can be found liable for errors or property damage.

How Does E&O Insurance Protect Home Inspectors?

E&O insurance, also called professional liability insurance, covers home inspectors against allegations of wrongdoing, negligence, and mistakes or third-party lawsuits.

For example, while inspecting a property, you mistake a 15-year-old furnace for a five-year-old version of the same model. Your client purchases the property and quickly discovers their furnace is past its best-before date, and they need to buy a new one. As a result, your former client may turn around and sue you for damages.

While this type of claim may have been avoidable, some are harder to spot. For example, home inspectors have been sued for water damage that wasn’t even there at the time of an inspection, simply because a roof leaked or a front porch had a gap where water seeped into the basement.

The Best Way to Protect Your Home Inspection Business

Home inspectors strive to provide their clients with objective, honest, ethical, and reliable professional advice. Protecting Canadians who are making the most significant financial investments of their lives is a big responsibility. Everything a home inspector says to and does for their clients can influence their decision-making. That’s why you need to protect your business and finances with a home inspector insurance policy.

Fill out an online application to get a free quote from Zensurance. Our licensed brokers will shop our partner network of over 50 Canadian insurance providers to get you insured quickly and affordably and answer any questions you have.

– Reviewed by Aharshan Thangarasa, Team Lead, Contractors, Zensurance.

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About the Author: Liam Lahey

Liam is the Content Marketing Manager at Zensurance. A writer and editor for more than 20 years, he has been published in several newspapers and magazines, including Yahoo! Canada Finance, Metroland Media, IT World Canada and others.