Carry Insurance?

I am currently contemplating the high cost of carrying insurance for my company. In doing so, I wondered how many Canadian inspectors carry E&O. Please reply at and let me know if you do and any thoughts/experiences on the subject.

I would have posted this as a poll however, I am not entirely sure how. Damn newbies. :roll: :roll: Your feedback would be greatly appreciated and obviously all comments will be kept confidential.

Thanks guys (and girls)

Thaine Godfrey


I purchased it from FREA and paid $4200 for the year including GST. I am debating about renewing. The thing of it is - you pay for the year but if the claim lands outside of the period in which you are insured you are not covered. So even though you do the actual inspection while you are insured you are not covered if the claim occurs after the policy expires. This means if you want true protection you will be in a perpetual cycle of expensive insurance year after year until you feel safe.

On the good side - realtors like to hear you have the insurance.

As for clients - if they ask about insurance before booking I would rather not deal with them anyway.

Its a catch 22. Whatever makes you sleep at night is the right decision!!

Just my 10 cents…


I carry insurance only because the francise I work for requires it’s inspector to be covered,just over $3600. a year. In my oppion we do not book any more inspection per week or month than anyone elles because we have insurance.


There are two types of insurance coverage, one is “claims made” which you have, and there is “occurence based” which covers you retoactively so to speak. It also costs more to purchase.

You also have to take into account your premium and should you have a claim, and the insurance pays out of court you will also pay your deductible. So in any given year if you have a claim you must take into account the deductible and the premium. That is very expensive coverage!

Its economically beneficial for the insurer to pay out rather then expend huge amounts of money trying to defend. Should your insurer prevail however as I have read, you are entitled to recoup your deductible, from the losing party.

I thing long term it would be beneficial to lobby the government when licencing comes to ensure there is some kinda liability cap on our risk, thus reducing insurance. As to self insurance I don’t believe that is a reality as it would take a large number of people to get on board. To my knowledge no HI association has self insurance for one reason on another.

Just my thoughts, and I been doing this since 1991.


**The value of experience is not in seeing much,
but in seeing wisely. **

  • Sir William Osler 1905

Would anyone happen to know the history of claims settled by FREA or number of claims which have gone to court and won?

I bet no one will tell you!

The value of experience is not in seeing much,
but in seeing wisely.
- Sir William Osler 1905

This is an interesting point, I wonder if they have a cut off point whereby its not worth them defending and they just roll-over?.
It would be interesting from an educational stand point of what type of claims are prevalent and time periods involved.
This is an area of the business that I am least happy about, and sometimes leads me to be overcautious with “Further Evaluation” comments
The flip side is an uninsured colleague in the US who’s philosophy is to have no assets and therefore not be worth suing.

I can tell you from my experience… sued by puchaser for concealed foundation collapse, it was a latent defect not observable, sealed crawlspace. Sliding door over failed foundation plumb, level and worked smoothly, floor level, no slope, walls plumb at time of inspection. Puchaser moves in, two years evolve, she calls me wants to know what I am going to do… She said to me “you have insurance!” Long story short puchaser was seeking $50K, insurer settled for $15K, and paid her legal costs. My insurer wrote the puchaser a cheque for $22K! I paid my deductible and of course my premium for that year. All based on a latent defect that the vendor knew about because he built the house and had lived in it till he sold it. No one else had an opportunity to hide and camouflage the foundation. Even the insurance adjuster was on my side. The insurance company used some half *** lawyer who didn’t even make any attempt from what I saw to defend me!

Because vendors were old, and no money one insurer was heard to express an opinion that the vendors were old and no money, so the insurer would be offering a settlement.

The only winners are lawyers who see $$ in an insurance policy.

**The value of experience is not in seeing much,
but in seeing wisely. **
- Sir William Osler 1905

I know a HI who had $2,500:00 deductable a few years ago and a client went after him for an abandoned oil tank that had reported on .(They had gas in the home for many years).
He recommended it be removed by a qualified contractor as it still had some oil in it .
The new purchaser decided to remove it him self with some buddies and dropped it . They sued both Agents the previous home owner and the Inspector (for $300,000;00 these Figures could be not quiet correct ).
The HIs said to the insurance company I have no responsibility as I reported it and said to have it removed by qualified Contractor .
His insurance got them selves of the hook for $3,500:00 .
So the HIs had to pat $1,000:00 and had his insurance go up $1,500:00 a year because he had a claim .
I do know of more very similar to this .
The insurance companies will not fight for the HI it is easier to settle and raise you rates.
Unfortunately too many of the newer HIs have some knowledge and figure when the older HIs like me and others try to let them know what has happened and will more then likely happen again and advertising that ( I have full coverage E&O insurance ) is not a good or very smart thing to do they some times think we are not telling the truth .

Roy Cooke…

Thank you for the great reality checks - its unfortunate that we too often hear this as the case. So my question beckons to ask - please tell me how this really protects the home inspector? Certainly it offers some shelter or protection - but in my books the shrewd client can also become a beneficiary in your insurance plan - do they not?

And lets not forget - those inspectors who left the home inspection business because they could no longer get or afford that E&O insurance. That has become another huge detriment to the new inspectors. As a comparison in Ontario, BCQ (building code qualified) inspectors can get E&O for under $2000 from guess who -Encon. Something is wrong - if we are considered a higher risk.

Raymond even when I co-authoured on the insurance study report for CMHC - we received very little assistance to the facts from the insurers. The facts remain very close and confidential. We are damned if we have it and we are damned if we don’t carry it!

Insurance does not make economic sense. You pay up to 5000.00 per year and 2500 deducible. Then the insurance pays out $3500.00. It seemes to me that if you paid the claim yourself it would be cheaper. In this case 1500.00 cheaper. and no increase in premium, in fact no premium at all. Instead of giving it to the insurance co put it into a defense fund account and each year you will have 5000.00 more to pay any claims. If the claim is bogus then you have the option to fight it in court.
Does this make sense? Anyway thats my two cents worth.

For some reason there are many inspectors who seem to think insurance is for the benefit of the client. It is not, it is protection for the home inspector, the inspector pays the premium, the policy is in the inspectors name. The insurance is to protect you the inspector from catostrophic loss because you as an inspector negligently inspected a property resulting in a loss to your client.

Many inspectors advertising insurance try to infer to the public that they are better inspectors because they have insurance. Thats nonsense having insurance does not make you any more qualified then someone who is not insured. More likely a person with no insurance will be more cautious.

As far as I am concerned anyone stupid enough to be bragging and advertising they are insured deserves to be sued.

**The value of experience is not in seeing much,
but in seeing wisely. **

  • Sir William Osler 1905

Hi there Mr. Cooke
Its Bill King writting I’m the new kid on the blook I’m just getting my feet wet in the industry actually taking a night course presently and am vey interested in the field. I recently passed the NACHI exam and find these message boards very informative anyway what I wanted to ask was do you recommened myself a new inspector or soon to be to get Insurance it seems to be a very touchy subject. My teacher doesnt seem to positive about it I was just curious what you think about a new guy getting started.
Thank you very much for your time

There is much written on this BB about insurance .
This is a decesion only you can make .
If you would like to talk give me a call . 613-475-1144
Roy Cooke

Geeee… Igot this fancy NACHI home inspection agreement
in the front of my NACHI binder for my customer, that was
drafted by a well recognized lawyer, and it’s to protect me from

I guess you are reasonabley new to the Home Inspection Industry .
There is nothing that can protection from being sued.
The best thing you can do is make sure you write hard talk soft and miss nothing.
Even then you can still be sued Good inspection good report and good contract help a little .
Having your client at all inspections helps a little more .
If you do not feel you can handle the thoughts of being taken to court then this might not be the best business for you to get into .
We all are here to help you ask and we will try and Help .
Roy Cooke … CMI…CHI…RHI……