Thread: Seller Wants to Be Added as Additional Insured

A buyer who is interested in having me inspect the property they are buying said "The seller asked for a certified, insured home inspector. They require prior to allowing access to the home, an insurance certificate must be provided to seller naming it as an additional insured".

Have any of you ever received a request like this? What benefit is this for a seller if they are included as additional insured?

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Never been asked for an insurance certificate for an home inspection, but have for other reasons not related to home inspections.

Generally speaking the seller wants an insurance certificate to simply ensure you as the inspector are covered for damage or breakage (G&L) to anything in the house that you as the inspector are covered with G&L and the seller knows that the insurer will cover (hopefully) any damage you may inflict on the property during the course of your inspection accidentally or otherwise.

http://www.google.ca/url?sa=t&rct=j&...YmdMvKoeQXsXrw

I understand they want to know that whoever is entering their house for the inspection needs to be insured. But, the seller is specifically stating they need to be added to my insurance as an additional insured party before I am allowed to come ina and inspect their house. For example, my policy states that realtors are listed as limited additional insured. But this seller wants to appear as a limited additional insured party on my policy. I don't get it.

I'd call your insurance provider and see what they think and say.

If they were asking me to include them as additionally insured, I'd be thinking twice about taking on the job.

Originally Posted by Raymond Wand

If they were asking me to include them as additionally insured, I'd be thinking twice about taking on the job.

I would not give a second thought to just saying NO.

Originally Posted by Nick Ostrowski

I understand they want to know that whoever is entering their house for the inspection needs to be insured. But, the seller is specifically stating they need to be added to my insurance as an additional insured party before I am allowed to come ina and inspect their house. For example, my policy states that realtors are listed as limited additional insured. But this seller wants to appear as a limited additional insured party on my policy. I don't get it.

Call your GL insurance provider and ask them. It really is not that big of a deal to have them added as a one time additional insured for the time that you are on the property. I had to do this last year on a property, I made the call and within an hour I had an email with the certificate with the persons name on it.

The coverage for the real estate agent is an extension of your E&O. It covers the agent for referring you if you screwup ad they are named in a lawsuit.

The request strikes me as very odd and it immediately raises a red flag. What possible benefit is there for the seller in having an inspector add them as an additionally insured party?

Who knows. Perhaps the vendor already has something damaged or something lost or missing and they are going to peg you the inspector as the party who damaged an item or stole something and they are coniving to pin it on you and your insurer.

But then again who knows...?

I get that request from builders and new construction sites.

There's a huge difference between "additional insured" and "certificate holder". The later simply proves you're (policy holder) covered. The former is an rare request for me, and requires an additional premium to your insurance company.

Maybe the seller had a previous experience with a sub-contractor that wasn't properly insured.

I'd pass.

My GL insurer does not charge extra to add a person for a limited time period. I agree, that it is odd for a homeowner to make this request. If my insurer did require an additional fee I would tell the owner that I would be glad to add them if they pay that fee.

Again, call your insurer and get their take on it. If all it involves is a call and you can book an inspection and make $$ what is the problem. This is why you have insurance!

For new construction inspections I had several national builders (and a few who thought they were that big) request the 'additional insured', which I provided.

But for a one-off home inspection ... I would ask my client if they read the real estate sales contract and that if the contract states that the seller can demand that, I would go with it, but if the contract is like any other contract I've seen - tell the client to have their agent tell the seller that the inspection will be done this day at this time and that the client does not want the seller present, and, by the way, no 'additional insured' either. Make the agent aware that if the seller balks, the agent is to tell the seller that there is nothing in the contract which ALLOWS for such a demand, and that if the seller INSISTS on such a demand, the buyer will gladly sign a new contract with that clause included *at half the current sale price* ... (in other words, tell the seller to 'go stuff it' ).

If this was a seller's market, the seller would have more sway and swagger, in this market it is just chest puffing.

I've added parties as 'additional insured' numerous times for long term contract work, but have never been asked on a HI. I speculate that the seller has been involved in a project in the past that required contractors to do this and felt the need, but doesn't really understand why it was required. In all the instances I've had to do it, I was working FOR the party that requested it.

BTW, it has never cost me anything and was easily acquired.

Originally Posted by Nick Ostrowski

The request strikes me as very odd and it immediately raises a red flag. What possible benefit is there for the seller in having an inspector add them as an additionally insured party?

It may be an odd request, but the majority of us do not know enough about insurance to be accurate. It could be as simple as the seller wanting to eliminate some of the trickle down red tape normally involved in their getting whole, if you accidently drive through the front door. I believe Scott's got it in that your carrier will have the answer to your red flag.

Such requests are common in the construction industry. Perhaps the seller is associated with the construction or insurance industry. I wouldn't be afraid to honor the request, provided my insurance company is OK with it. Just remember the request apparently has value to the seller. So assign a value.

As stated by others, perhaps your client's Realtor can suppress the issue if the request is not mentioned in the sales agreement. This would be my first choice.

Is the seller by any chance an attorney?

I have been asked to do this while doing commercial and phase inspections, but never for a home inspection. Could just be someone read an article or blog by an insurance or real estate "expert" where this was a recommended step in the process for some reason.

I received a follow-up e-mail from the buyer inferring that the home is new construction and the seller is the builder. I placed a call to my insurance provider asking for information about this. I'll report back with what I hear from then.

I spoke with my insurance carrier and there is not charge to have the builder added as an additional insured party for the one inspection.

The seller is already insured when you enter the home if you have general liability. If you just have E&O then the seller is not protected. When I say he is insured I mean if you drop a lader on his car, or kid, or drop that 10,000.00 vase.

Builders just want proof of general liability to protect damages to the property.. I have had a builder ask that everyone accompanying me including him to be protected under my general liability even if he were to say, get electrocuted, at his home, that he built etc. I said no and told the client that due to the unreasonable demands of the builder she would have to call another Inspector.

Originally Posted by Ted Menelly

The seller is already insured when you enter the home if you have general liability. If you just have E&O then the seller is not protected. When I say he is insured I mean if you drop a lader on his car, or kid, or drop that 10,000.00 vase.

Builders just want proof of general liability to protect damages to the property.. I have had a builder ask that everyone accompanying me including him to be protected under my general liability even if he were to say, get electrocuted, at his home, that he built etc. I said no and told the client that due to the unreasonable demands of the builder she would have to call another Inspector.

I carried a $2mil GL policy ... safer for me for the homes I was inspecting ... to add the builder as an additional insured was no cost, as simple as a phone call, and that stuffed that back down the mouth of that builder. The builders in South Florida stated playing the game of 'you can't inspect my houses unless you have blah, blah, blah'. A few of us had blah, blah, blah, blah, blah, and blah, and shoved their demands right back down their throats. Their demands stopped some inspectors, but not the few of us who knew how to play their game and spike the ball right down to the ground on the other side of the net.

I had one builder tell me that they would not accept my report unless I referred specifically to what was not on the plans, let alone the code. I asked my client if I could look over their contract to purchase the house, and, the next day my client and myself were in the builder's office with all the head honchos - they were refusing to provide us with the plans, and thus were refusing to accept my report, after an hour of tying them up we pulled out our ace-high straight flush and they were flushing alright ... right there in the sales contract the builder stated that he would provide a copy of the plans to the buyer if the buyer asked for a set ... you could have heard a pin drop in that office ... they quickly put a set together for us and before they could usher us out I pointed out that this was not an approved set and therefore was not a suitable set. After getting us a copy of the approved set, and they then (to their dismay) began providing us with a copy of *every* *single* *change* which was different than shown on the plans.

The builder's hard nose attitude back-fired on them and they truly regretted seeing me drive onto the site. My client was truly ticked off at the builder too, so he paid for me to go as often as I wanted to go ... and I did go check on his house several times a week. And almost every time I went by the builder needed to provide another revision to the plans.

Do I like making people aggravated like that? Nope, not at all ... unless they deserve it ... then, yes, I do enjoy it.

I got the updated paperwork from my insurance carrier and forwarded it to the buyer to give to the builder. Now the builder is saying something is not worded correctly (I don't know what yet) and he wants it changed. I don't even know what the builder wants it to say but I'm ready to say NO regardless. I'm not starving for work and this is turning into a headache.......and I haven't even done the inspection.

Originally Posted by Nick Ostrowski

I got the updated paperwork from my insurance carrier and forwarded it to the buyer to give to the builder. Now the builder is saying something is not worded correctly (I don't know what yet) and he wants it changed. I don't even know what the builder wants it to say but I'm ready to say NO regardless. I'm not starving for work and this is turning into a headache.......and I haven't even done the inspection.

When after years of experience you can see a problem coming from miles away best to stay away.

In my industry (manufactured homes) the people have almost every time been nice, buyers as well as sellers. Once in a while I get an odd duck. Usually my MO is to make them as well as their concerns my most important issues. This usually calms them down. I'll even tell them everything I find as I go (which I usually don't do).

Walking away is a good choice in this matter, especially if you have the business and won't miss this one fee.

Expert Mobile & Manufactured Home Inspections O.C. & San Diego Co.

Your insurance provider should be able to explain the difference between an additional insured, an additional named insured, and a certificate holder.

Additional insured's are normally easily added to a General Liability policy; however, they are not normally added to an E&O policy. An E&O policy is meant to cover you as the inspector for professional services performed. Most E&O policies have an insured vs. insured clause that basically states, insured's can't sue other insured's that are listed on the same policy.

By listing the builder as a certificate holder it does not confer any rights under the policy to the builder. It's main purpose is to show you have coverage and if you were to cancel your policy mid-term, your agent would inform any and all certificate holder's that you no longer are insured.

Definitely talk to your agent.

Thanks for the info Niccole. At this point I don't even want to use up any more time making phone calls and finding out what the builder wants. What seemed to be a simple paperwork matter is now beginning to take up too much of my time. The builder can require whatever they want but this doesn't work for me. I'm going to have to tell the buyer he's going to need to find another inspector.

To be honest, I don't blame you one bit. Good luck!

I just spoke with the buyer and advised him I will not be inspecting this house due to too much red tape on the part of the builder and the amount of time I've been spending on just trying to meet their requirements. The buyer asked if he could pay me more but I told him it's not about money. It's about the builder steering me around and putting me to work before I even can even get to the inspection.

Maybe another inspector won't have a problem doing all this but it's not up my alley.

A tip of the hat for setting your own limits.

Originally Posted by Nick Ostrowski

I just spoke with the buyer and advised him I will not be inspecting this house due to too much red tape on the part of the builder and the amount of time I've been spending on just trying to meet their requirements. The buyer asked if he could pay me more but I told him it's not about money. It's about the builder steering me around and putting me to work before I even can even get to the inspection.

Maybe another inspector won't have a problem doing all this but it's not up my alley.

Good move I think. There's enough stress in this line of work without additional hoops to jump through.

Expert Mobile & Manufactured Home Inspections O.C. & San Diego Co.

I don't have any contractor do work at my house without an Acorn cert for liability and workers comp. It can cost a lot of money if something went wrong and they had neither coverage. I have several clients who require the same of me and my insurers send the required Acorns. It does not change the coverage nor premium. Usually it's just a phone call or an email. No fuss no muss.

Originally Posted by Nick Ostrowski

I got the updated paperwork from my insurance carrier and forwarded it to the buyer to give to the builder. Now the builder is saying something is not worded correctly (I don't know what yet) and he wants it changed. I don't even know what the builder wants it to say but I'm ready to say NO regardless. I'm not starving for work and this is turning into a headache.......and I haven't even done the inspection.

Nick,

I run into this often with Pulte Builders.
Have them email you what they want on the G&L for additioanlly insured (Limits of Liability)

and how they want to be named on the Policy.(this is usually the problem where they suggest something needs to be re written)

Forward the email to your agent and you should be good to go.

I already bailed on the job Joe. I have a problem with being steered around by people who I don't work for and don't pay me.

Originally Posted by Nick Ostrowski

I already bailed on the job Joe. I have a problem with being steered around by people who I don't work for and don't pay me.

Just thought I would mention it..
I have been doing multiple inspections within Applecross (Pulte Builders) and the request varies among site managers within the different sub divisions of the same community.

It gets confusing, but having them send an email spelling out the request gets it done the first time.

Works the same for my GC business as well.

Originally Posted by Nick Ostrowski

I just spoke with the buyer and advised him I will not be inspecting this house due to too much red tape on the part of the builder and the amount of time I've been spending on just trying to meet their requirements. The buyer asked if he could pay me more but I told him it's not about money. It's about the builder steering me around and putting me to work before I even can even get to the inspection.

Maybe another inspector won't have a problem doing all this but it's not up my alley.

If you don't get a lot of requests for these inspections with customers using the same builder it's not a bad idea to pass.
After you jump through the insurance hoops for access, most of them will then tell you what you can and cannot do/ and what you can and can not access to inspect.

Keeping in mind that in PA HIs are not licensed by the Commonwealth as HIs to begin with...and the status of the seller as a builder of recent constrution, not the least surprised, and the request sounds completely reasonable - and expected, esp. since the home in question would be or once was subject to his own Workers' Compensation insurance audit/premium responsibility, he does not "direct" your activities as a HI for a buyer client yet has liability while you do so both WC and GL, and his own GL continuing liability and/or warranty beyond, etc. especially since he was or is "the builder" even if the construction activities have been concluded (and any continuing obligation (warranty/liability) as same which carries forward. Most any "regular" HO also has an ultimate exposure or "pocket" for WC whenever anyone performs work related activites at their property - most just aren't aware of same, and "waivers" are meaningless regarding same in many jurisdictions (black-letter law or or case-law decisions).

WAG (my guess/supposition) - Your certificate either indicates owners/operators are excluded from W(orkers) C(ompensation) policy, or doesn't indicate one way or another, presence of WC coverage for which your own self-employment/self-directed "work" activities, aren't excluded from coverage,

As Nichole mentioned - being additional named insured carries with it additional indemity and status for HO/builder/seller. Since seller is builder, may also have interest in status as additional named insured on your other coverages, GL and/or E&O, esp. if builder hasn't clarified C of O status or cleared all open permits, however would be wanting additional named insured generally on GL even if C of O final status. I suspect as a builder/owner even if personal occupancy at property that his/her primary interest is in workers' compensation coverage non-exclusionary to yourself personally and wanting named additional insured status, and secondarily as additional named insured on all your coverages except E & O, not just notification certificate holder, and be just certificate holder on E & O.

However, I suspect if non-occupant owner/seller/builder - is looking at Workers Compensation not GL or E&O, looking to assure WC is not excepting owner/president/worker from WC and to be either named or additional insured on a WC policy verifying that you (Nick O) are not excluded..

"Regular" HOs with insurance experience and/or consulting with their HO agents, will be looking for same, even if just certificate (notification) holders.

If you do have WC and do not exclude yourself as owner/operator/officer, etc. It would be a simple matter to request your agent(s) to issue additional named insured cert. There may or may not be a fee to do so, as the nature of HI is to be performing your services at and upon the property of others, and engage in such activities which have certain risks (climbing ladders, roof examinations, entering attics & crawl spaces, opening electrical panels, etc.) many companies "build-in" a certain number of such requests during the policy period at no or very little additional "cost" to "service" same for the short-term during the policy period. The status and number of those may or may not effect the level of coverage afforded and this status (occurance/claims made, etc.) and something an additional named insured has status to confirm directly regarding coverages listed.

Important to remember that you additionally follow-up to formally notify following your completion of "work" when same is done, and verify notifications confirming same are completed.

Originally Posted by H.G. Watson, Sr.

Keeping in mind that in PA HIs are not licensed by the Commonwealth as HIs to begin with...and the status of the seller as a builder of recent construction, not the least surprised, and the request sounds completely reasonable - and expected, esp. since the home in question would be or once was subject to his own Workers' Compensation insurance audit/premium responsibility, he does not "direct" your activities as a HI for a buyer client yet has liability while you do so both WC and GL, and his own GL continuing liability and/or warranty beyond, etc. especially since he was or is "the builder" even if the construction activities have been concluded (and any continuing obligation (warranty/liability) as same which carries forward. Most any "regular" HO also has an ultimate exposure or "pocket" for WC whenever anyone performs work related activites at their property - most just aren't aware of same, and "waivers" are meaningless regarding same in many jurisdictions (black-letter law or or case-law decisions).

WAG (my guess/supposition) - Your certificate either indicates owners/operators are excluded from W(orkers) C(ompensation) policy, or doesn't indicate one way or another, presence of WC coverage for which your own self-employment/self-directed "work" activities, aren't excluded from coverage,

....

Even MORE Important to Remember is that Builders, GC's and other Building Trades are also not Licensed in Pennsylvania.
In actuality, the requirements for Home Inspectors are more stringent than that of a Building Contractor in this State.

I agree with your Workman's Compensation assertion.
For myself, I have always been an Employee of the Corporation providing Home Inspection related services for over 12 years now.
I have always had Workman's Compensation coverage.
Many Builder's use that requirement to discourage inspections. They are always surprised when being told that I need WC, I ask for their fax number to send it over.