Ask an E&O Insurance Pro: FAQs about Pre-Inspection Agreement. When beginning to work with an insurance program specifically for home inspectors, it can sometimes be difficult to fully understand all of the processes and risks that can come into play during an inspection. To help educate to reduce these risks, we’ve compiled a couple of our most frequently asked questions.
One of the large areas of discussion for E&O insurance is what’s referred to as the Pre-Inspection Agreement, as well as what protections are offers to inspector. Below are a couple of the most commonly asked questions about inspection agreements:
What Should my Home Inspection Agreement Include?
This is another question that doesn’t have an easy question. The best way to figure out what your agreement should include is to look at examples. Many inspection organizations provide agreement templates or examples. These references are a fantastic resource, and have been utilized successfully by countless inspectors. Remember though, do not plagiarize. These examples are guidelines, if you haven’t received written permission, or if you are not a member of the organization or association, lifting this content is a big no-no.
There are a couple things to look for when creating your inspection agreement. Aspects such as a Limit of Liability, as well as an Environmental Hazards clause are necessary additions, even if the state provides some protection from these liabilities. These state protection cases are usually only based on the most rudimentary definition of inspections, so there is only a small window where these cases fit in.
What is the Ideal Length for my Home Inspection Agreement Contacts?
Depending on how you look at it, there’s no right or wrong answer here. There are countless styles and different types of home inspection contracts, you have to figure out what best fits your business model. I have seen great contracts that total a single page in length, and I’ve seen very comprehensive contracts that itemize each and every detail. It all comes down to what will help the client understand the agreement best, and will protect you in the process. The main thing that needs to be expressly details is what a visual-only home inspection involves. Overall, it comes down to what you feel protects your business, and the customer best.
Does Every Client Have to Sign Their Inspection Agreement? Even if they’re Moving or Aren’t Local?
The short answer is yes. To expand on this, it’s crucial that each client signs off on their inspection agreement. Keep in mind that if a client is no longer local or available to sign the contact in person, they very well could not have looked at the home in person. This then means that they are entrusting you to detail what to expect when they move into the house. It also entails that they will have less of a familiarity with the property, as you could potentially be the first person they contact.
It is worth the time and effort to acquire a signed agreement (an emailed or faxed copy works). This will provide you the additional protection needed to ensure that the client knows what a visual inspection involves. Many home inspectors have enlisted the help of an eSignature option to make the process easier for their clients. This lets their clients the opportunity to log-in, sign and verify the document without needing to jump through additional hoops.
Can a Client’s Realtor Sign the Home Inspection Agreement by Proxy?
No, under no circumstances is that legal. Make sure that this is clear, and don’t consent to any Realtor signed proxy agreements. Remember who you’re providing the service for, most likely it is for a particular client, and not the realtor. Although it is great to create a good working relationship with local Realtors as you build your business, they are not the client, and cannot sign for them by proxy.
This is all about risk management and protection, as you would be the one paying for it if a claim was ever filed. Typically, smart and seasoned Realtors know this, and will help you acquire the true client’s signature. Remember, this isn’t a restaurant, we don’t do substitutions.
Why Should I Get Insurance if I Already Have an Inspection Agreement?
Like in most other industries, many professionals don’t feel insurance is something they need. We’ve constantly heard professionals state that their inspection agreement is bullet-proof, while means that there’s no need for insurance.
Granted, if you’re located in an area that requires E&O insurance, this doesn’t really apply to you. However, for those still living in the Wild West, remember that insurance is protection for “what if?” It is smart business to invest in as much protection as you can to ensure your business can weather any proverbial storm. Within the world of home inspection, an inspection agreement the first and last line of defense against filed claims. Claims happen to every inspector, it isn’t a matter of if, but more a matter of when, and it only requires one to change the trajectory of your business.
Byline: Derrick Slouman is a contributor for EiiPro and EliteMGA, a US company specializing in errors and omissions insurance. For more information on E&O insurance, and to see what options are available to you, visit EiiPro and EliteMGA on the web today at www.eiipro.com.