My state requires E&O insurance. I carried it before we were licensed.

I think there are a lot of people that are asking questions like "Are you licensed and insured?", or "Are you licensed and bonded?", just because they have heard these terms before and link them to someone that is professional. It gives them peace of mind to know that the guy they hired has them. I don't think everyone that asks those questions are thinking of going after me. Of course some may.

I start every inspection by asking my client to read my contract and sign in two places. I tell them that my contract is basically saying that they are hiring me to do the inspection, that I'm going to do it to State (and ASHI) Standards, and that I DON'T HAVE X-RAY VISION.

I also tell them that my inspection is NOT a guarantee, or an insurance policy. It is ONLY an observation of what is going on with the property that day, while I'm there.

If I'm asked what happens if I miss something, I then tell them something like this....
"Think of this inspection as a big game hunt. I'm here to hunt elephants, or the big stuff that is wrong with the house. In the course of hunting elephants I may let a few rabbits get by me. I can almost guarantee some small stuff will get by me. I'm going to be looking at maybe a thousand items during this inspection. There is a very good chance that "something" will be missed.

For instance, I'm not checking the wall paper at all, or the window blinds. In fact, I'm not really here to look at the cosmetic things at all. I leave that for you to do, and the best time to do it is during your walk thru when the house is empty.

While i'm going to check most of the outlets and switches, I am NOT going to move the china cabinet to get to the one behind it, or move furniture to look at the flooring under it.

Also keep in mind that with some things, if they are near the end of their expected life, may quit working right after we leave here today. And somethings JUST HAPPEN, like when my 2 year old microwave/vent quit working."

Of course my discourse is tailored to the house I am inspecting, but the information I give them is the same. I'm going to do the inspection to the best of my ability, I DO have limitations, I am NOT an insurance policy, and I DO stand behind my inspection.

I also tell them that while I do have E&O insurance, it really only comes into effect WHEN they sue me.

Over the years I have returned some inspection fees. Some I returned even though I knew I was right, and would probably win in court, should we land there. I have paid to repair things. I have paid to repair things that I felt I wasn't responsible for. I have also walked away from clients too. Some I have fired before they had a chance to hire me and waste my time - I just had a bad feeling over the phone.

My wife has a very good sense about people, and if she hears something that sound wrong, she just doesn't take the job. I guess we screen our clients as much as they shop us.

I also ask every client if they have ever had a home inspection. If they say NO, then I give them more information about what they can expect, and what they shouldn't expect.

JF