Knowing the risks that insurance inspectors face is our business, and we take those risks very seriously. From identifying risks to helping home inspectors mitigate those risks on the job, we constantly research the latest trends in the industry so that we can be prepared to give advice to inspectors who are in search of answers about mitigating risk. Through our time in the errors and omissions insurance industry, we’ve found that the pre-inspection agreement is among the chief concerns for inspectors, regardless of how much experience they have in the field. Thus, we have here compiled a short list of errors and omissions insurance questions and answers regarding the pre-inspection agreement, and we hope that it will serve as a resource for inspectors and their clients:
Should all clients sign an inspection agreement? What about clients who are not local?
Absolutely. The pre-inspection agreement is an essential tool in protecting not only your client, but yourself as well. Because non-local clients may have not yet seen the house, it is up to you to protect yourself by securing the inspection agreement signature. In most cases, an email or fax signature will be relatively easy to obtain.
Can someone other than the client sign the agreement? The realtor?
Under no circumstance should anyone other than the client sign the pre-inspection agreement. Because you are performing a service for the client, and not for the realtor, and because the client will call you if problems arise with the home, it is essential to have the client’s signature on the agreement. Luckily, most realtors will understand that the pre-inspection agreement is an aspect of the inspector’s risk management practices, they can often be relied on to help locate the client and to secure their signature.
Should pre-inspection agreements be long or short? Is there a specific link?
The length of the pre-inspection agreement is less important than what you could call its “density.” In general terms, the density of the agreement refers to the number of legal concepts that it introduces, and the amount of plain language versus specialized legal vernacular (legalese) is used in the document. In general, as long as the document is drawn up by an experienced attorney then the density and length of the document will be your preference.
In some cases, you may find that you are more comfortable, or that your clients are more comfortable, with a longer and more dense contract. Similarly, you and your clients may be happier with a shorter and easier to read or understand contract.
What should I make sure is included in my pre-inspection agreement?
While this may seem like a simple question, it is actually extremely complex. Primarily, because it’s not easy to know what problems can arise and, thus, it’s impossible to accurately know how to protect yourself. Luckily, many example contracts exist online from which you can draw inspiration. Another resource is to inspect your state’s code for information regarding such protections as state limits of liability. When using these pre-written agreements, though, it’s important to remember that you must obtain permission before using them, and that you should never use a pre-made legal document without first allowing it to be reviewed by an attorney.
Does errors and omissions insurance negate the need for an inspection agreement? Vice versa?
Unfortunately, very few legal agreements are actually “iron clad.” There are always loopholes or interpretations to legal codes that will allow attorneys to get around your contract. Similarly, some states simply have legal insurance requirements and thus you must carry insurance. Still, regardless of whether or not your state requires you to carry errors and omissions insurance, it’s important to remember that the pre-inspection agreement is simply a first-level defense against litigation. The errors and omissions insurance policy is there to protect you if the agreement fails to protect you, and thus it is an essential aspect of every business, not just inspection businesses.