subject: The Importance of Errors & Omissions Insurance for Home Inspectors [print this page] The Importance of Errors & Omissions Insurance for Home Inspectors
Real estate isn't a simple, straightforward industry. There are laws, rules and regulations involved that require specialized knowledge, particularly for professionals who provide a service to sellers and buyers. Without the right kind of information, buyers, sellers and insiders may not be able to maneuver legal pitfalls successfully. Transactions also tend to be emotionally charged, causing even the smallest mistakes to lead to unnecessary legal cases that involve insignificant actual damages. For legal protection against any complaints by the seller or buyer, professionals in real estate, home inspectors and brokers use errors and omissions insurance.
Errors and omissions insurance for home inspectors offers protection for inspectors against legal cases. Real estate buyers and sellers depend on whatever information home inspectors provide to make a decision and they can easily suffer from significant loses if the inspector fails at his or her job. Each time a home is offered for sale, the home inspector is called upon to assess a home and judge its condition based on structural quality and the condition of its fixtures and basic systems.
Most home and property buyers and sellers are not equipped with specialized knowledge in real estate, so they have to rely completely on reports and assessments provided by the home inspector before deciding whether to buy or sell. A buyer who decides to purchase a home based on a favorable report from an inspector, for example, could sue that inspector in case he discovers that the house actually needs repair -- contrary to what the inspector reported. E&O insurance coverage can provide the inspector much-needed financial support to cover the cost associated with the lawsuit. Many professionals in the business understand that errors and omissions insurance for home inspectors is a necessary business expense, something that professionals in real estate need to protect themselves against financial problems in the event of a lawsuit.
Brokerage firms also carry E&O insurance for the same reason. This is because both sellers and buyers depend on realtors to manage legal paperwork such as purchase agreements during the buying or selling of a home. Purchase agreements often include indemnification clauses to absolve brokerage firms of responsibilities involving damages that may arise from purchase agreements and contracts handled by agents of the firm. E&O insurance is still considered in case the brokerage firm is sued in certain situations including gross negligence.
Service-based companies such as those in the real estate field consider E&O insurance as an essential business expense that affords protection from any legal action. It's the type of protection that offers a buffer against major financial setbacks and even bankruptcy for businesses who might otherwise have to pay significant amounts of money for legal fees, court costs, settlements and related expenses.
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