Builder Indemnification

I would appreciate if you would share some of your experiences, whether good or bad regarding builders placing the burden of requiring that they are added as an additional insured and indemnified prior to your performing an inspection of their home[s].

One of the statements on “their” form to the buyer is that they do not HAVE to act on anything the inspector finds deficient. Wow…

They don’t. Neither does a regular seller. Not my circus not my monkees.

Would you care to share your experiences whether good or bad?

Do you have insurance?

I have never seen or been told of anything like this. I do quite a few new construction inspections. Most builders are actually pretty cool and make a list on-site of the items I find and typically makes a commitment to the client to correct right there on site. I have found situations where the Builder would not allow me to inspect the property until after the property closed. it is usually the bigger development builders like KB Homes or JR Horton as an example.

My new construction inspection reports have all deficiencies listed as “refer to the builder for further evaluation and appropriate corrective action.”

CA is pretty tough on builders. It may not be the same in other states.

Unfortunately Texas is not.

Sounds like Ryland.

If it is Ryland, I suggest that you read paragraph #2 & #4 very carefully and tell your client to do the same, before you think about signing it. If you haven’t made up your mind by then, ask your attorney to review it.

An alternative, if the client is stuck in their contract is to inspect it the day after closing.

James this is very common to be required to be named additional insured, the builder owns that home until closing and their insurance requires them to protect themselves. as for the fixing of the deficiencies, I’d show that to your client, but your clients contract with the builder would most likely hold them responsible anyway.

General Liability coverage is all you would need to be able to meet this requirement.

Of the few I have been privy to this seems to be the case. Having said that what specific advantage then does the builder have to require they be named as an “Additional insured” under the Home Inspector’s GL policy?

The reason they want to be an “additional insured” is in case you damage something they can make a claim against your insurance since they are now named on your policy.

Parker, Colorado Home Inspector

I agree with the above. Also, in my experience you’ll need at least 300K in coverage. Also, show proof of health insurance/medical coverage. Also, vehicle insurance and the certificate that they are a named insured on your GL policy.

Parker, Colorado Home Inspector

It would be nice to hear David’s answer on this when he gets an opportunity to.

Emmanuel, in the case of the builder and a home inspector this would rarely ever come into play but remember this requirement is blanket from the Builder lawyers so it covers all contractors or people entering the property. with that said, the best example would be a sub contractor (HVAC) guy is walking the not yet home owner through his install and a piece of duct comes loos and falls on his head causing injury. Well when Johnny home owner calls his 800 lawyer everyone is sues for negligence including the GC who had nothing to do with the actual install of the duct work. The additional insured coverage added on the subs policy naming the GC forces the subs policy to become primary to cover the claim and to defend the GC. the claim does not fall on the GC’s policy as his insurance company will point that out in court, thus again putting it on the sub’s policy.

there are a lot if if’s in claims but this is why additional insured’s are required by contractors/subs working on someone else’s property.

Thank you for the response. So in essence our policy would be the primary policy tagged regardless. The builder’s policy would be the secondary if ours did not pay a sufficient amount for the agreed on claim.

In essence yes, but every claim would be dealt with between the insurance carriers as required and based on investigation to determine actual at fault, partial negligence etc…

I didn’t mention that this blanket requirement by builders, property owners or any business that you may do work in is also covering a requirement for workers comp in most cases too.