E&O Insurance for Home Inspectors Explained: Retroactive Insurance
All professionals are open to insurance claims especially home inspectors looking for E&O insurance, and ensuring that their business is properly protected against claims is an essential task for business owners. Because some claims may not be reported until months, or sometimes years, after the even that triggered them it can be necessary for businesses to purchase retroactive insurance along with their regular E&O insurance plan. Retroactive insurance helps businesses stay protected against claims that fall outside of their currently active plan, and is an excellent way to mitigate risk and to protect the business.
If you’re not concerned with retroactive coverage for your E&O insurance policy, you should be. Retroactive coverage is an essential aspect of claims-based insurance for home inspectors. Because without it, your business may be unprotected on a claim that calls outside of your policy’s coverage period.
There are several important things to understand about retroactive insurance and about how it pertains to an E&O insurance coverage plan:
- What is “retroactive” insurance, and what’s its importance to E&O insurance holders?
- What are the differences between Occurrence and Claims-Made insurance coverage?
- How can I find out if retroactive coverage is included in my errors and omissions insurance?
What’s “Retroactive” Insurance Coverage?
Retroactive coverage is offered by most claims-based insurance agencies, as it lengthens the period of time for reporting errors and omissions insurance claims to include prior acts. This means that a retroactive policy covers prior years of work. Like most other claims-based policies, retroactive coverage would provide insurance for inspections that were performed prior to the start of your E&O insurance policy. This is an important addition to insurance for home inspectors, because it means that previous incidents will be covered, even though they predate the current coverage period.
As an example, let’s say you’ve been performing home inspections for 5 years, and that during each of those 5 years you carried E&O insurance. Next assume you are purchasing a new policy for the upcoming year and that you wish to add retroactive coverage. As long as there were no gaps in coverage during those 5 years, the retroactive insurance coverage of your new policy would be able to cover those previous years as well as the present and future.
Of course, there is a catch; retroactive insurance for home inspectors only applies from the date of the current policy back to the most recent gap in coverage. In other words, if you carried errors and omissions insurance from May 1st, 2010 until May 28th, 2012. Let’s say that during that time, you bought a new policy, and carried it until now, then ending the first policy. Since there was an overlap of coverage, your new policy would retroactively cover your last policy’s date range. That being said, any lapse between policies would prohibit retroactive coverage before the start date. Thus, it is essential for claims-based E&O insurance policy holders to maintain coverage for the duration of the time that they perform home inspections.
What Are The Different Types of Insurance Coverages? And How Do They Differ?
Both claims-based coverage and occurrence coverage will provide liability coverage for professionals and their business. However, each type of coverage approaches reporting and claims differently.
Claims-based coverage is concerned with the date on which the incident is reported. In other words, if an incident that triggers a claim isn’t reported until years later, then the policy holder must have a current, active policy in order to be covered under insurance. Also, claims-made insurance covers a specific period of time, and if the incident occurs before that time begins, then the policy holder must also have retroactive insurance in order to be covered under the policy.
Occurrence coverage, however, is concerned with the date of the incident, rather than when it is reported. This means that as long as the policy holder was insured at the time of the incident, then they will be covered by their policy even if they do not hold an active policy when that incident is reported. For this reason, current coverage is typically much more expensive than claims-made coverage, though it may not be appropriate for all types of business risks, such as those that are immediately apparent and that are unlikely to remain hidden until the policy expires.
Do I Have Retroactive Insurance Coverage?
Knowing the terms and limitations of your home inspector is essential to protecting your business from liability and claims. Therefore, all information pertaining to the policy can be found in the documents that your insurance provide will give you when the policy is first activated. Additionally, most insurance providers are available 24 hours a day for claims information, and they will be happy to give you the information you need. Finally, when you buy an E&O insurance policy it is critical to understand to ask your insurance provider about a retroactive policy. Many insurance policies for building and home inspectors provide complete retroactive coverage. Make sure to ask for it, as well as the necessary documentation to acquire it.
EiiPro is gearing up to head out west for the 2013 Home Inspection Conference in Las Vegas, NV. A staple of the home inspection business, the 20th anniversary of the big industry event is set to be huge!
We here at EiiPro look forward to this conference each year with great excitement. It’s truly the amazing how much we learn, and how much fun we have. With classes, hands-on training, special guest presenters and more, each day of the near-week-long convention is jam-packed with exciting ways to improve and enhance your inspection business.
What makes the conference so specials is that it caters to everyone. No matter if you’re just beginning, or are an industry legend, this conference is designed to keep you sharp and make sure you have tools to be even more successful.
From live inspections, to testing the newest technology on the market, every day is filled with exciting news and information that provides unparalleled insight into the inspection industry.
Interested in joining us in heading out to Vegas for all 5 days of the 2013 Home Inspection Conference, October 20th -24th? Learn more about the 2013 Home Inspection Conference by clicking the link. See you there!
Unfortunately, accidents happen. Even the most meticulous professionals can make a simple mistake, whether it’s missing an important deadline, making a bookkeeping error, or just plain overlooking something. That’s why consummate pros can find themselves embroiled in costly and lengthy legal battles no matter how careful they are. Nobody wants to face litigation. No matter who you are or how conscientious you are about your responsibilities, you need to protect yourself and your business with e & o insurance.
What is E and O Insurance?
Sadly, even if a claim against you is completely groundless and is based only on a “perceived” error, it can cost you thousands of dollars in legal fees. Errors and Omissions insurance protects you and your business in the event you are held responsible for advice you gave, service you provided, or service you failed to provide. In addition to the legal expense, include your loss of wages. After all, you’ll spend your time defending yourself when you could be working. To work without e & o insurance is risky. Why risk your livelihood? E and o insurance can cover give you the protection and peace of mind you need.
Should you get Errors and Omissions Insurance Coverage?
If you are a professional providing services for a fee, then you face financial risk and should have e and o insurance. Simply put, it’s professional liability coverage used by agents, brokers, inspectors and the like who deal with financial transactions. Some states even require e & o insurance.
When Should you get E&O insurance?
As soon as you are working, you should have e and o coverage. You may think it’s wiser to put it off to some later date, but mistakes or conflict can happen anytime. It’s best you have e and o insurance at the onset.
Doesn’t my General Liability Policy Cover me?
If you have a general or commercial liability policy that covers “bodily injury” or “property damage,” it doesn’t cover service professionals comprehensively. Service professionals are involved in transactions that have unique risks—not to mention the possibility of huge financial losses by clients—which are not included in those policies. Errors and omissions insurance is comprehensive, offering service personnel complete protection.
Ready to get started? Click here for a 30 second Quick Quote on Errors and Omissions Insurance.
We’ve all seen a movie with a character obsessed with cost cutting or maximizing productivity. Some of us have even been lucky enough to watch this character work his micromanaging magic firsthand in our own workplaces. Risk management is another area where a lot of people turn a blind eye, assuming it’s only the domain of the office’s anal-compulsive mid-level executive.
Smart home inspectors know this isn’t true, though. Basic steps to manage risk during home inspections are important for preventing claims against you. Here are a few measures for home inspectors to manage liability risks without serving as the inspiration for a character in an employee or coworker’s screenplay:
Use a Thorough Pre-Inspection Agreement
Collaborate with your attorney to create a pre-inspection agreement and have every client sign it prior to inspection. Define the aspects your inspection doesn’t cover or guarantee. Many home inspectors aren’t engineers, exterminators, or geologists; they can’t provide the same specific, in-depth inspections that specialists can. Your home inspectors don’t have X-ray vision (unless you are reading a screenplay) permitting them to see into walls and beneath the ground. Inspectors do have tools they can utilize such as thermo cameras and testing, however if something is not visual it is usually not covered in an inspection.
Create a Record of Inaccessible Areas
When home inspectors cannot access areas that do require inspection, it must be documented. Home inspectors should always go on the record—in writing—to say a certain area(s) were inaccessible and that access and subsequent inspection are necessary to ensuring there isn’t concealed damage.
Inform Clients of the Severity of Problems
Explain problems and their severity clearly. Recommend an expert in a specific area to come out and give a professional opinion on how something should be fixed or repaired. Your inspector is there to inspect the property not to fix the problems they may report on. The inspector may note what problems may be expected if they do not address them. Inform them about any safety risks, how the damage may compound or spread if they delay repairs. Make sure every deficient condition and your recommendations are in your inspection summary report (including narrative and checklists) as well as any action items.
Avoid Identifying Sewage Disposal Responsibility
Home inspectors are generally not required by law or even encouraged by association-sponsored standards of practice to identify whether sewage is handled privately or by the municipality. Still, many include a determination in their reports. Unless your state’s laws or local association standards direct otherwise, avoid this practice. If, for some reason, you feel compelled to include a determination, provide a source for the information and qualify that it has not been verified.
Get Visual Documentation of the Inspection
Whether it’s with a camera or a video camera, create a visual record of home inspections. Far more often than not, such documentation from the time of inspection settles disputes in favor of the home inspector.
Don’t Admit Guilt
An apology or otherwise indicating you may have missed something during a home inspection is an admission of guilt. If a client gets in touch with a complaint, simply provide assurance that you’ll look into it immediately. Look back over your report and return to the home to evaluate the merits of the claim. If you feel you have a claim or incident to report to the insurance company notify them or your representative immediately. They will help you create a thorough written and visual documentation all along the way and prepare your official response.
This Sunday July 1st is the last day to register for early bird pricing for the Inspection Conference in Las Vegas. Use Code MGA-1923 for your registration Today and SAVE.
TAREI will be hosting their 2012 Summer Conference, and a wide variety of courses will be available to choose from. Try to attend as it is always a great chance to see peers, live education classes and enjoy Austing TX! REGISTER NOW! Don’t forget TAREI members receive a discount on their insurance through our program. Remember Elite for your E&O insurance!
InterNACHI Message Board Just topped 900,000 posts. Great job InterNACHI! Members check out the the June News letter! Need to join or want to receive a copy? Contact me at firstname.lastname@example.org and we will connect you right away.
HomeGauge has some very exciting things happening for home inspectors and we wanted to pass it along.
First, TRM is here. Time Released Messaging is now out and available. Find out more by visiting HomeGuage.com
Second, This is the final week to enter to win on the HG sample video report contest. You could win $500 in cash, just send your sample report with some video clips! For more information contact HG at email@example.com tell them Elite sent you!
Finally, remember that HG customers receive a discount on their insurance through our program and even more when you add home warranty!
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