What is E&O insurance, so that as a true home buyer will it protect me. There seems to be a great deal of confusion among home buyers about E&O insurance and exactly how it applies to both the real- estate transaction and also to the house inspection. Most individuals are aware of the term Error & Omissions insurance through articles in home buying magazines or from one of the many TV shows on homes and renovations. Most consumers are also aware that real estate agents experienced E&O as standard for some right time now. They can also see some true home inspection firms are advertising that they carry E&O as well.
The misunderstandings about E&O comes from the mistaken belief that E&O insurance will there be to protect the home buyer from mistakes-Errors, and things left or missed out-Omissions. Years and long before home inspections ago, I myself was told by a realestate broker I think highly of that E&O was there to safeguard me in case she missed something in the paper work. That appears to be the stock response to the question in the realestate career and now they have spread to the home inspection industry as well. As a home, cottage , and commercial inspector in Orillia, Gravenhurst, and all of Muskoka I have received many queries during the last ten years about E&O from clients.
They will ask me if I carry it and tell me that so and so has it to protect me do you? When I describe what E&O insurance is and how it works exactly, many are surprised a few are stunned even. As shocking as it might be, any professional, lawyers, engineers, realestate agents, brokers, and home inspectors may carry Error and Omission plans, but not to protect the buyer.
They bring E&O to safeguard themselves. This is exactly the same setup as the liability insurance you keep on your home insurance. You will be the covered or secured party. If E&O existed to protect the home buyers then they would be the insured client. E&O would be insurance against specific perils ( errors and omissions of their inspector) that the house buyer could buy that could protect them. They would pay the premium and after proof of a claim they might be paid by the insurance company.
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This would be the same setup as home fire insurance or your car theft insurance. But isnt the professionals E&O insurance there to help the homebuyer? The short answer is a resounding no, with one really small exception. To illustrate I give you the following: If you have a person slip and fall in your snow protected driveway, they might choose to make a claim.
This is the same as a home buyer might claim against an agent, ie. It is also similar to a home buyer who might state against a home inspector who skipped reporting light weight aluminum wiring in the home. In all these three instances the claimant would normally first approach the other party with the complaint and make an effort to resolve it.
A reasonable house owner, or a good home inspector or real estate agent shall deal with this matter and solve it right here. Only after not getting the response they want for would the person making a claim themselves or with the aid of legal assistance approach the insurer. The insurance company would investigate the state by asking the claimant to verify by see and record it do happen, they’ll then attempt to see whether the covered is at fault or in virtually any real way accountable.
Often if it was a provable state for a little amount (usually just above the deductable) The insurer would inform their client they need to pay the deductable and they’ll pay the small balance to stay it. The real answer is very little or none. Using the same slip and fall situation, forgotten inclusions, or unreported aluminum wiring examples, lets say the state was for a large amount.