Don’t Inspect for Pests – Sued Anyway?
By Isaac Peck, Assistant Editor
Even if your inspection specifically excludes wood destroying insects/organisms (WDI/WDO), you are not protected from an irate homeowner suing you if a problem arises. That’s why it is good to have a clear scope of work, a signed inspection agreement and a broad errors and omissions insurance policy- just in case.
According to David Brauner, Senior Broker at insurance provider OREP.org, most inspectors who don’t inspect for WDI/WDO probably don’t think they need to purchase the coverage. So if a problem arises, they may be left on their own.
“We see new homeowners move in and begin a remodel only to find termite damage that was hidden behind a wall, so it was unseen and unreported by the inspector,” said Brauner. “Their first instinct is to try to recover some of the expense from the home inspector- and maybe get a free remodel. The inspector responds with their scope of work and agreement, signed by both parties, which specifically excludes WDI/WDO or pest inspections and is limited to what is visible. That’s great, but if that does not stop the homeowner there, the inspector should be prepared to prove his case in court and it may be without the help of his insurance carrier if he did not purchase that specific coverage.”
Brauner says that OREP’s E&O base policy provides what is known as “incidental” coverage for pests and many other services- for when a problem like this arises. “That’s why a broad policy form is so important,” said Brauner. Brauner recommends asking your agent when you’re shopping insurance about what is and isn’t covered in the base policy- whether you specifically inspect for it or not.
“Obviously, if you perform pest inspections, and it’s not included in your base coverage, like it is with the OREP policy, it’s necessary to purchase that coverage. But if you don’t inspect for it, you should be aware whether the ‘incidental’ coverage is in place in case the unexpected happens,” says Brauner. “The unexpected is not so unusual in this business, unfortunately. Insurance, more than anything, is about peace of mind and having coverage when you need it.”