Since the new Kansas law states that, “no registered home inspector may…limit the amount of damages for liability for any errors and omissions which may arise during a home inspection to less than $10,000 in the aggregate for each home inspection” and since I’m being required to have a “policy of errors and omissions insurance coverage”, I was curious of a few things.
First, I’m thankful for NACHI including in the inspection agreement site the following paragraph for it’s Kansas members:
“INSPECTOR assumes no liability for the cost of repair or replacement of unreported defects or deficiencies either current or arising in the future. CLIENT acknowledges that the liability of INSPECTOR, its agents, employees, for claims or damages, costs of defense or suit, attorney’s fees and expenses and payments arising out of or related to the INSPECTOR’s negligence or breach of any obligation under this Agreement, including errors and omissions in the inspection or the report, shall be limited to $10,001.00, and this liability shall be exclusive…”
So if I include this in my pre-inspection agreement and have it signed, then do an inspection and miss something big, get sued and am found negligent; the most I can get sued for is $10,001? Even if what I missed would cost the buyer way more than that to fix? Do the courts honor that?
And I ask this based off of a conversation with an insurance agent who I was getting quotes from for insurance. Early on, prior to discussing the $10,000 clause, he said in terms of E&O, whether I had $10,000 or $300,000 probably was going to cost about the same. But after I mentioned the clause and said there was no need for that much since my liability was limited, he agreed as long as the courts would honor that. So he said if I could provide documentation, he could probably get a far better quote. But also recommended I double-check that to make sure that’s accurate. Am I correct in saying that all the E&O insurance I would need for a given inspection would be the $10,001?
If there wasn’t much difference in price between $10,000 and $50,000, should I go with more?
Have you ever lost a client because of the amount of the limit of liability in your contract?