Pros and cons of home inspection insurance
Q. In some of your articles, you advise people to hire home inspectors who have errors and omissions insurance (E&O). I've been a home inspector for 15 years and have avoided E&O insurance for four important reasons: 1) Insurance does not prove that a home inspector is qualified; 2) Insurance covers the inspector if he is sued, but it does not insure the homebuyer against financial loss for an undisclosed defect; 3) If a home inspector does his job well, he doesn't need insurance; 4) Having insurance attracts frivolous lawsuits. What do you think about these objections?
A. Regarding errors and omissions insurance, there are two schools of thought among home inspectors, and both have some merit. In response to your four arguments against E&O, here are some points and counterpoints:
On two of your points, we can agree: E&O insurance is not essential to every home inspection company, and E&O coverage does not indicate whether a home inspector is truly qualified. In fact, some of the best home inspectors work without insurance for one of the very points that you made: namely, that insurance can be a magnet for baseless lawsuits. As most people know, we live in a litigious business climate in which attorneys name as many defendants as possible in order to get as many settlements as possible. The deep pockets provided by an insurance company can definitely attract that kind of trouble.
On the other hand, frivolous lawsuits can be filed against a home inspector, even when there is no E&O insurance. Case in point: There was an ongoing lawsuit against a termite inspector for failure to disclose damaged wood in a home. The plaintiff's attorney decided to name the home inspector in the suit. The home inspector, by law, was not required to disclose termites, so there was no basis for the complaint against him. Nevertheless, he had to hire an attorney and eventually settled for thousands of dollars. With E&O insurance, he would have paid the deductible and walked away from the problem.
Lastly, doing your job well as a home inspector does not protect against claims and lawsuits because no home inspector is perfect. All inspectors make mistakes. Therefore, E&O insurance can provide valuable protection when defects are overlooked by a home inspector.
The debate over errors and omissions insurance will never be resolved to every home inspector's satisfaction. For some, having it is too risky. For others, the greater risk is not having it. It remains a choice to be made by each home inspector.
Q. My home inspector says the exposed wiring in my garage is too low and that it needs protection. What is the proper height for romex wire in garage walls?
A. The height for protecting romex wires in a garage is not specified in the electrical code. The code merely generalizes about protecting electrical wires, without giving specifics. But here are some practical guidelines: When romex wires are installed horizontally in the open framing of a garage, they can be damaged when people use them to hang tools, or if kids use them for climbing. The simplest solution is to install drywall over the open framing.
• To write to Barry Stone, visit him on the web at www.housedetective.com, or write AMG, 1776 Jami Lee Court, Suite 218, San Luis Obispo, CA 94301.
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