E&O Policy Question - TX Inspectors

[imported_John Smith]

I'm thinking seriously about getting out of the business. Looking at my current E&O policy, its not quite clear to me exactly how long they are covering me.

I know this sounds stupid, but I am confused if my policy covers me for the two year time frame past the date I did an inspection or just during the year that I had the policy.

I read the policy, but its not real clear to me. Haven't called my agent yet.

RULE §535.211
"(e) An inspector must retain sufficient records of professional liability insurance coverage, or any other insurance that provides coverage for violations of Subchapter G of Chapter 1102, to document to the commission continuous coverage for the preceding two year license period."

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[Trent Tarter]

You most likely need to purchase what is known as "tail coverage" if choosing to quit the business. Check with your E&O provider and state requirements.

[Ted Menelly]

I'm thinking seriously about getting out of the business. Looking at my current E&O policy, its not quite clear to me exactly how long they are covering me.

I know this sounds stupid, but I am confused if my policy covers me for the two year time frame past the date I did an inspection or just during the year that I had the policy.

I read the policy, but its not real clear to me. Haven't called my agent yet.

RULE §535.211
"(e) An inspector must retain sufficient records of professional liability insurance coverage, or any other insurance that provides coverage for violations of Subchapter G of Chapter 1102, to document to the commission continuous coverage for the preceding two year license period."

Your out, your out. Why do you think so many part timers got out? They could not afford the insurance is one of the reasons. I have never heard of anyone not in the business here having a suit against them or TREC going after them. I have also not heard of a soul carrying coverage after they got out. Quite frankly with all so many inspectors advertising that everything is added on to a home inspection for free it is getting impossible to make a living unless you give it all away yourself. Free terminate thru most home inspectors .... Why. Clients will pay for it. I did an inspection the other day where the man got prices at 175, 200, 225 and my price for 300. He used me because I did a few for him before. One for 250 and 275 included terminate inspection.

[Jim Luttrall]

Depends on your policy but like Trent said, you likely need "tail coverage" to cover your tail The state does not require it... unless you are going to get back into the business in the future.

[imported_John Smith]

Ted,
I really didn't understand your post. "I have never heard of anyone not in the business here having a suit against them or TREC going after them." Not sure exactly what that means.

I havent had a suit against me or TREC going after me.
I can afford the insurance, but as a businessman, I don't think the working conditions, financial risk (deductible), competition against low ballers, make it worth while for me anymore. Im not willing to give my services away for next to nothing. I have some other business ideas working that are paying off.


I wish nothing but the best for those of you that are doing this work. Its not easy and you provide a real service for the general public. Most people just dont recognize the true value of the service.

[Niccole Barnes]

Definitely contact your E&O agent. If you have a claims made policy, you are only covered if you have insurance in place when you performed the inspection and when the claim comes in. In this case, it would be wise to purchase a "tail policy" or extended reporting period.

If you have an occurrence policy, there should be an automatic 4 year "tail policy." This means you would be able to submit a claim up to 4 years after your last policy expired.

Most home inspector policies are claims made, not occurrence; however, I believe Allen Insurance Group is the only one that does offer this form.

[Adam Kling]

As a licensed insurance agent, I would be happy to review your policy to give you a definite yes or no on your tail coverage, but the other posts should be correct if you have a claims made policy.

Depending on what carrier you are insured with tail coverage can be purchased anywhere from 1-4 years on average. The typical charge for tail coverage is pretty close to 100% of your premium for the first year of tail, 150-200% of the premium for 2 years, etc. In most cases it is the same cost or comparible if you just renew your policy for the 2 additional years.

Being on an occurrence form policy would automatically provide you with coverage after you policy expired. Typically states require a 7 year reporting period on an occurrence form, but again, you should check with you specific E&O agent. I would be happy to answer any questions about tail coverage if you need additional help.

Adam Kling
InspectorPRO Insurance Program
Citadel Insurance Services
801.610.2704
akling@citadelus.com