As a building inspector, it’s your duty to make sure that structures and utilities follow building codes and regulations, and are safe for public use. Whether you specialize in residential electrical, commercial plumbing, or commercial building inspection, you have a duty to convey information comprehensively and accurately. If a building you inspect fails to meet building codes, your report can change the construction process and prevent future accidents. Though your work can save lives when done correctly, you may be held liable for later accidents if anything goes wrong. In the event of an unfortunate accident, you and your company might even be sued.

In order to protect yourself financially against lawsuits, accidents, or disasters, consider purchasing business insurance. Business insurance could be a good fit for your building inspection company if:

• You would like to insure your services and practice against claims of poor performance or errors in your work
• You employ others
• You provide benefits to your employees like health insurance or a 401(k)
• You work in an office that you lease or own and store valuable equipment or property in that office
• Clients or vendors visit your office

What insurance coverage do I need as a building inspector?

Most businesses share common insurance needs, which include such policies as general liability insurance and commercial property insurance. For building inspectors, it is particularly important to obtain professional liability insurance. Below we explain some of the more common business insurance coverages that building inspectors should consider.

Professional Liability Insurance

As a building inspector, your judgment impacts the safety of anyone who enters a building you are responsible for. Failure to accurately report a structural problem or inadequate testing of an electrical system can create serious hazards for any people in the area and result in your firm being held financially liable. Moreover, even if you perform your job correctly, you can still be sued.

Professional liability insurance, also known as errors & omissions insurance, can protect you from potential client lawsuits stemming from the performance of your professional work. And, unlike most other professional liability policies, professional liability insurance for building inspectors generally is able to cover third-party bodily injury or property damage that comes as a result of your work.

Examples:

• Errors/Negligence: Your company inspects a home that’s being sold. The inspector files a report that claims the home is in perfect condition. Six months later, the new owners discover major cracks in the foundation. They decide to sue your company because it was never mentioned.
• Performance: Your company misses two inspection deadlines for a new condominium construction project. This results in delays to the project, and the owner must seek the services of another inspection firm to complete upcoming inspections on time.
• Bodily injury: Your firm inspects a new home that has been built, and your inspector misses the fact that the handrails along the staircase do not have a return. A few months after the owners move in, one of the owners falls down the stairs because their purse got caught in the handrail.
• Lawsuit without merit: Your inspection company finds water damage in a new four-story office building in Downtown Michigan. The investor who is trying to sell the office building believes your inspection affected demand for the building and caused it to stay on the market longer. He sues your company.

General Liability Insurance

General liability insurance, or commercial general liability, can protect your business from lawsuits claiming property damage or bodily injury caused by your business or your employees. This is another important coverage for a building inspector, as accidents are common on construction sites and there is potential for serious physical injury. The four types of coverage included in general liability insurance are: products & completed operations, property damage, bodily injury, and personal & advertising injury.

Examples:

• Property damage: An inspector is testing the electrical equipment inside of a new restaurant that is nearly finished being constructed. When he turns the lights back on, they short-circuit and destroy the electrical panel. The building’s owner is disgruntled and wants to sue your company for damages.
• Bodily injury: The ladder you are using on a worksite topples over and shatters a glass light fixture that is hanging over a few construction workers. The workers suffer deep cuts from the glass shards and must receive medical attention. You are sued for damages.

Workers’ Compensation Insurance

Workers’ compensation insurance provides financial benefits to employees who suffer work-related illnesses or injuries while working for your business. In many states, businesses that have employees are required to carry workers’ compensation insurance. In exchange for accepting workers’ comp benefits, an injured employee agrees to not sue your business for the injury. Workers’ compensation insurance is no-fault, which means that it pays benefits regardless of whether the employer or employee is at fault for the injury.

Worker’s compensation can cover the costs of:

• Funeral expenses
• Disability benefits
• Medical expenses
• Rehabilitation costs
• Death benefits
• A portion of lost wages

Example:

• One of your inspectors is investigating a property. He walks down a flight of stairs which collapse under him, breaking his legs. He is hospitalized and must use a wheelchair until his legs heal. After the accident, he stays in the office and does paperwork because he is unable to go out in the field. The paperwork job only pays $500 per week versus his prior pay of $1,000 per week, but workers’ comp covers his medical bills and pays him $250 per week to supplement his lost wages.

Commercial Property Insurance

Commercial property insurance helps protect the buildings that your business operates out of, as well as other property relevant to your business. Coverage includes the buildings themselves, the contents of those buildings, and the property of others in your care. If you have computer equipment, surveying instruments, or other items that are crucial to your work as a building inspector, consider investing in a commercial property policy. Commonly covered perils include fire, lightning, explosion, windstorm, hail, theft, and vandalism.

Examples:

• Buildings: A coworker is brewing tea in the office kitchen. Another coworker recently used the same stovetop to fry potatoes, and spilled vegetable oil on the area while he was cleaning up. The first coworker sets the tea to boil and leaves the room. While she is away, the stove bursts into flames and manages to engulf the refrigerator before anyone can put it out. You must pay for a new refrigerator.
• Contents: You work in a building with large windows, and an office worker accidentally leaves one open overnight. There is an unusually severe hailstorm. The hail blows into the building, ruining the carpeting, a desk, and a computer. You must pay to cover the damage.

Commercial Auto Insurance

Your company likely owns or leases one or more vehicles for your inspectors to visit worksites and client homes. In the event of an accident involving your vehicles, commercial auto insurance can provide financial protection. This type of insurance has both liability and property components. The liability component protects your business if it is at fault for causing a crash and causes bodily injury or damages someone else’s vehicle or property. The property component of commercial auto insurance protects the value of your vehicle against crashes, theft, and other perils. Importantly, commercial auto insurance also provides protection for vehicles owned personally but used for certain business purposes.

Example:

• One of your inspectors is driving a company van to a customer’s house. While making a right turn, your inspector doesn’t see a bicyclist in his blind spot and ends up hitting the bicyclist. The bicyclist is knocked off his bike and suffers a broken arm. Your commercial auto policy will cover the bicyclist’s medical expenses and any resulting loss of income if his broken arm impacts his job.

Business Owner’s Policy

A business owner’s policy, also known as a “BOP,” is a special bundling of policies that can provide coverage for risks that are common to small business owners. BOPs combine property, general liability, and business income and extra expense insurance coverages for qualified small businesses. Importantly, a business owner’s policy can help you save money, with lower premiums than buying the individual coverages separately.

Final Word

As a building inspector, you are responsible for ensuring the safety of those who will later use the building or facilities under your care. Though you may be certified and capable, mistakes can happen and not every lawsuit against you is just. One of the best ways to ensure the financial security of your business is to invest in business insurance. While policies like commercial property and general liability insurance can protect you from the unexpected dangers that all businesses face, policies like professional liability insurance can protect you financially in the face of lawsuits alleging errors or mistakes in your professional work. Just as you are concerned about the safety of the buildings you inspect, it’s wise to be concerned about the financial safety of your business. Business insurance can offer you peace of mind.