Home Inspector E&O and GL - need opinion

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Rob
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Home Inspector E&O and GL - need opinion

Post by Rob » Wed Jan 03, 2007 10:25 pm

The basis of my question below is whether a home inspectors E&O policy which includes premises liability is better or worse than a home inspectors E&O policy with a contingent BI/PD endorsement. Which scenario would you choose?

A) $500K/$1M E&O with $500K premises liability only, claims made, $2500 deductible, written on a Specified professions form, Evanston Insurance Company, $4690

B) $500K/$1M E&O with $500K premises liability only, home inspectors pl form, claims made, $2500 ded, Lexington Insurance, $4048.45

C) $500K/$1M E&O with contingent BI/PD endorsement, misc prof form, claims made, $5,000 ded, Lloyds of London, $4210

Also as an option can write a separate GL policy for $663 and each of A, B and C would have a premium reduction by removing the premises liability but having the GL separately can be a problem if it is a gray area as carriers may point finger at the other.

LadyBroker
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E & O

Post by LadyBroker » Thu Jan 04, 2007 10:00 am

What coverage are you gaining with a premises liability endorsement? That doesn't cover the client's premises, only the insured's, such as an office space. Wouldn't your client need a full GL policy in addition to the E & O cover?
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JackJM
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Home Inspector E&O and CGL

Post by JackJM » Thu Jan 04, 2007 11:54 am

I would sell the client the Professional that offers the best coverage for that exposure, excluding any Premises coverage. Take the savings and buy up to $1 mil per Occurence. Then, secure a CGL for Prem Ops.

Mainemiss
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Premises & E&O

Post by Mainemiss » Thu Jan 04, 2007 1:06 pm

Premises coverage follows the insured to wherever he is performing his work unless the policy specifically restricts it to the office location.

Clearly there is the need for an E&O coverage which can sometimes be endorsed onto a GL or the other way around depending on the form. Policy forms need to be read to learn the specifics, but my opinion is that both are important for a home inspector. Coverage comes before price.

Prolines
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beware of the professional services exclusion in the GL Poli

Post by Prolines » Thu Jan 04, 2007 1:18 pm

It is important to note most standalone GL policies will specifically exclude BI/PD arising out of Professional Services. Therefore, the Contingent BI/PD component (which specifically provides this coverage) may be your best option assuming the E&O component stacks up.

Rob
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Re: E & O

Post by Rob » Thu Jan 04, 2007 1:55 pm

LadyBroker wrote:What coverage are you gaining with a premises liability endorsement? That doesn't cover the client's premises, only the insured's, such as an office space. Wouldn't your client need a full GL policy in addition to the E & O cover?
Premises liability will follow the insured as their is no designated premises endorsement restricting it to one location. So this would provide coverage if say a ladder fell on a childs head.

The contingent BI/PD endorsement is good as it would provide coverage for PD resulting from an error or omission.

This person has had coverage with Evanston last 4 years and receipts are only in the $25K range so if I advise we go with the Lloyds with contingent BI/PD and also the CGL policy (which I can get separately for $662) she would likely choose to not take the CGL and purchase coverage for her biggest exposure. I'm trying to get her the most bang for the buck.

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Post by Rob » Thu Jan 04, 2007 6:57 pm

The premises endorsement states:

"We shall pay amounts the insured is legally liable to pay...by reason of the insured's negligent acts while performing a home inspection on any premises that is not owned, rented, leased, or controlled by the insured. Negligent act(s) means an act which results in bodily injury or property damage during the performance of a home inspection. "

The contingent BI/PD endorsement states:

"Exclusions Item 2. is deleted in its entirety and replaced with the following: Based upon or arising directly or consequentially from Bodily injury or Property damage; However this exclusion shall not apply to Claims for Bodily injury or Property Damage caused directly or consequentially, by an Insured solely while performing Professional Services.

So then lets suppose insured says "if I don't get the contingent bi/pd" then what is the E&O for, i.e. what does it cover?

Mainemiss
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BI/PD Exclusion

Post by Mainemiss » Fri Jan 05, 2007 7:23 am

It sounds as if the exclusion is solely one applying to Professional services not GL. This makes me wonder where the professional coverage actually is. Naturally the activities of a home inspector can lead to 3rd party BI/PD on two levels: 1. Ladder being knocked over breaking property or injuring someone...GL, 2. Failure to detect inherent defect and BI or PD resulting after he has left the premises...ProfLiab.

Perhaps the form gives back that coverage being excluded elsewhere in the insuring agreement.

Prolines
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E&O

Post by Prolines » Fri Jan 05, 2007 11:44 am

So then lets suppose insured says "if I don't get the contingent bi/pd" then what is the E&O for, i.e. what does it cover?[/quote]


The E&O is intended to provide coverage for financial loss as a result of the home inspector's error or omission. His failure to notice a variety of problems with a home could result in a 'diminshed value of property claim' after the error was discovered.

Mainemiss
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Post by Mainemiss » Fri Jan 05, 2007 11:52 am

A quick thought...the contingent BI/PD seems to be a GL endorsement to a Professional Liability Policy so naturally the Prof would be excluded for that part of the policy because it is covered in the basic policy.

With the Contingent BI/PD endorsement all bases needing coverage are covered. As a responsible agent I would rather not sell any policy than leave one half of an exposure uncovered and I think that is the presentation that needs to be made to the client.

No one can know from which side of the aisle a loss will come ahead of time. Even if they made the decision which side to cover...at loss time you know very well who will be alleged to have influenced the either or decision.

Rob
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Post by Rob » Fri Jan 05, 2007 6:52 pm

Thanks for your responses everyone. Problem solved.

Got the BI/PD exclusion on the E&O form completely deleted. In addition, it includes liability for negligent acts of the insured which result in bodily injury and property damage during the inspection.

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