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    Default Article: How to improve your marketability with referring party indemnification

    Hi InspectionNews Readers!

    With 69 percent of home buyers nationally choosing their home inspectors based on their realtors' recommendations, it's no wonder why we see a lot of industry interest in bettering agent marketing efforts. Yet, few inspectors know that most home inspection insurance policies come with referring party indemnification, an endorsement that many real estate brokers see as a benefit.

    Teach your local realtors about your insurance policy's referring party indemnification coverage, and you may be able to improve your referral rate. You can learn more about referring party indemnification in our recent article, previewed below.


    How To Improve Your Marketability with Referring Party Indemnification

    During a recent home inspection, you missed the polybutylene pipes in the attic. When your clients, the home buyers, discovered your error, they were furious. They didn't just sue you; they sued everyone involved in the home's sale. That included the real estate agent that referred the job to you.

    What is referring party indemnification?

    In home inspection policies that include referring party indemnification, should there be a claim about inspection findings, the insurance company assumes liability for not just the home inspector but the referring party.

    If your insurer offers third party indemnification, your insurance policy will define referring real estate agents, real estate brokers, mortgage lenders, relocation companies, and other relevant third party referral sources as limited additional insureds. As such, these referral sources can receive insurance coverage from claims arising from your inspection services.

    Common conditions to these endorsements include:

    • You and the referring party didn't give notice of the claim to another insurance carrier before your current policy began.
    • The inspection related to the claim occurred on or after your retroactive date and before the end of your policy period.
    • Before you started carrying insurance, you and your referring party couldn't reasonably predict that your clients were going to file the claim.
    • The referring party reports the claim in writing to your carrier during the policy period.
    • The claim doesn't involve any services the referring party performed independent of you, the home inspector.
    • The claim is subject to your insurance limits.

    In addition to insurance carriers, some other companies offer referring party indemnification to home inspectors. Just like you do with your insurance policy, we recommend reviewing any referring party indemnification plan you intend to use to make sure you understand the terms.

    How can referral coverage improve my marketability?

    As a home inspector, Paul Stratton, Owner of Stratton Inspection Services, LLC in Arizona, finds that realtors worry about potential claims. Many are concerned that, if the home inspector they refer to the client misses something, they'll be liable. Stratton calms brokers' nerves by explaining that his insurance policy protects them, too.

    "Realtors want to know that they're covered and that their client is covered as well," Stratton told us in an interview for our article "How to work with more realtors." "[Referring party indemnification] gives them more peace of mind."


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    Last edited by Stephanie Jaynes; 08-19-2019 at 08:23 AM. Reason: All of the apostrophes, quotation marks, and em dashes turned into question marks.
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    InspectorPro Insurance
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