If you are becoming a home inspector or already working in the field, errors and omissions insurance is not optional. It is a professional requirement in most states, a licensing requirement in Oregon and Washington, and your primary financial protection when a client believes something was missed. Here is what it covers, how it differs from general liability, what it costs, and how claims actually work.
What Is Errors and Omissions Insurance?
Errors and omissions insurance, commonly called E&O insurance, is a form of professional liability coverage. It protects you when a client claims that your professional services caused them a financial loss. In home inspection, that typically means a buyer discovers a problem after closing and believes you should have identified it during the inspection.
E&O insurance covers your legal defense costs and any settlement or judgment up to your policy limits. Without it, you would be paying those costs out of pocket, which can be devastating. Legal defense alone in a professional liability case can run tens of thousands of dollars before anyone reaches a settlement.
Is E&O Insurance Required in Oregon and Washington?
Yes, in both states.
In Oregon, the Construction Contractors Board requires licensed home inspectors to carry both errors and omissions insurance and a surety bond as conditions of licensure. You cannot hold an Oregon Certified Home Inspector (OCHI) license without proof of current E&O coverage.
In Washington, the Department of Licensing similarly requires E&O insurance and general liability insurance as part of the licensing requirements under RCW 18.280. Your coverage must remain active throughout your license period.
If your policy lapses, your license is at risk. Most inspectors set their renewals on automatic to make sure this does not happen.
E&O Insurance vs. General Liability: What Is the Difference?
These two types of coverage protect against different risks, and you need both.
E&O insurance covers claims arising from your professional services. If a client says you missed a defect that cost them money, E&O is what responds to that claim. It is about the quality and accuracy of your professional work.
General liability insurance covers physical injury or property damage that occurs during your work. If you break a window while accessing an attic hatch, damage a finished floor carrying your ladder, or a client trips over your equipment at an inspection, general liability covers those situations. It is about physical accidents in the real world, not professional judgments.
Neither policy covers the other’s territory. An inspector with only general liability has no protection against a professional negligence claim. An inspector with only E&O has no protection if they accidentally damage the property during an inspection. You need both, and both states require both.
What Does E&O Insurance Actually Cover?
A standard home inspector E&O policy typically covers claims that you negligently failed to identify a defect that a competent inspector exercising reasonable care should have found. Common covered scenarios include missed signs of active water intrusion, unidentified electrical hazards, overlooked structural concerns, and undisclosed roof conditions.
What E&O does not cover is also important to understand. Intentional wrongdoing is never covered. Claims involving inspections you did not actually perform are not covered. And most policies have a claims-made structure, meaning the claim must be filed while the policy is active, not just while the inspection was performed. If you cancel your policy and a claim comes in six months later, you may not be covered. This is why many inspectors purchase tail coverage when they retire or stop inspecting.
How Much Does E&O Insurance Cost?
For a solo home inspector, E&O insurance combined with general liability typically runs between $1,200 and $2,500 per year depending on your coverage limits, your claims history, your annual inspection volume, and the insurer. Some of the most widely used providers in the home inspection industry include InspectorPro, OREP (Organization of Real Estate Professionals), and Ellis Insurance.
Higher coverage limits cost more. A policy with $1 million per occurrence and $2 million aggregate is typical and appropriate for most solo inspectors. Some insurers price policies based on how many inspections you do annually, so your premium may grow as your business grows.
When you look at the per-inspection cost, the math is straightforward. At $1,500 per year and 300 inspections, you are spending $5 per inspection on protection. That is a very small percentage of a $450 inspection fee.
Real Claim Examples: What Triggers an E&O Claim?
Understanding what actually leads to claims helps you inspect better and document more carefully. These scenarios represent the types of claims that come up most often in the home inspection industry.
A buyer closes on a home and discovers the crawlspace has significant moisture damage and rot that was not noted in the inspection report. They claim the inspector failed to thoroughly evaluate the crawlspace. This type of claim is one of the most common in the Pacific Northwest given how frequently crawlspace moisture problems exist in Oregon and Washington homes.
A buyer moves in and finds water intrusion at windows or the foundation that appears to have been ongoing for years. They believe signs of prior intrusion were visible and should have been reported.
A roof that was noted as having years of remaining life fails within a year of the inspection. The buyer claims the condition was worse than reported.
An electrical panel that was not flagged turns out to be a recalled brand or a known fire risk. This comes up regularly in Oregon and Washington homes with Federal Pacific Stab-Lok or Zinsco panels that pre-date modern safety awareness.
How Pre-Inspection Agreements Interact with E&O Coverage
Most E&O policies work in tandem with your pre-inspection agreement, also called an inspection contract. Your agreement defines the scope of the inspection, establishes limitations, and in many cases includes a limitation of liability clause that caps your financial exposure to the inspection fee or a multiple of it.
Oregon courts have upheld reasonable limitation of liability clauses in home inspection agreements when they meet specific legal requirements for conspicuousness and mutual agreement. Washington has similar legal standards. These clauses do not eliminate your E&O exposure but they can significantly limit the damages a client can claim.
For a deeper look at how liability works when something is missed, see our companion post What Happens If a Home Inspector Misses Something?
The Bottom Line
E&O insurance is not optional for home inspectors in Oregon or Washington. It is a legal requirement for licensure and a professional necessity. Combined with general liability coverage, it protects your business, your assets, and your ability to keep working. At $5 or less per inspection in cost, it is one of the most efficient purchases in your business.
For the full picture on what a home inspection career involves financially, see How Much Do Home Inspectors Make? and Can You Make Six Figures as a Home Inspector?