Reports and missed defects
Claims that a defect was missed or misreported causing financial loss.
Building Inspector Professional Indemnity
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Building Inspector Professional Indemnity
Professional indemnity for building and pest inspectors.
Inspection claims almost always allege a missed defect. The report is the product, and the exposure follows it for years after the inspection.
What is it?
Building and pest inspectors provide pre-purchase, dilapidation, handover and defect reports, often under time pressure and with limited access, on properties buyers rely on the report to purchase.
What does building inspector professional indemnity cover?
Advice
Recommendations and opinions given alongside the written report.
Site attendance
Public liability while attending and inspecting properties.
What affects the cost?
- Number of inspections per year
- Report types - pre-purchase, dilapidation, defect
- Whether pest inspection is included
- Report disclaimers and terms of engagement
- Claims history
Worth raising on the call
- Missed defect allegations are the dominant claim type.
- Your terms of engagement materially affect exposure.
- Pest inspection is often assessed separately from building.
Claims we are commonly asked about
Active termites missed behind lining
A pre-purchase inspection does not identify active termite activity concealed behind wall lining, and the buyer claims treatment and repair costs after settlement. These claims usually turn on whether the inspection scope was non-invasive, what areas were recorded as inaccessible and whether that was communicated clearly in the report.
Cracking reported as minor
Wall cracking is described as minor and cosmetic, and an engineer later attributes it to footing movement requiring underpinning. The buyer claims the difference between what they paid and what the property was worth with the defect known.
Dilapidation report challenged
A dilapidation report prepared before neighbouring construction is relied on in a later dispute and its accuracy and completeness are challenged by both parties. Photographic records and the date stamping of the original inspection generally decide these matters.
Worth confirming in the wording
- Worth confirming whether the limitations in your terms of engagement are recognised by the policy, and whether cover is conditional on a signed agreement and a compliant report scope being in place before each inspection.
- Worth confirming whether timber pest inspections are inside the declared scope, since building and pest are commonly assessed and rated as separate activities.
- Worth confirming the retroactive date, because inspection claims frequently surface years after settlement and a claims-made policy generally responds only to reports issued after that date.
Common questions
How long am I exposed after an inspection?
Limitation periods vary by state and by the cause of action, commonly running around six years for negligence and contract claims, with building actions in some jurisdictions running longer from completion. Because of that tail, continuous cover and run-off after you stop inspecting generally matter more than the limit in any single year.
Does a disclaimer in my report protect me?
Well-drafted terms of engagement and a clearly scoped report genuinely help, particularly around inaccessible areas and non-invasive limitations, and insurers pay close attention to them. They are not a complete answer though, since a disclaimer that was never signed or was buried in fine print carries much less weight in a dispute.
Do I need professional indemnity to do pre-purchase inspections?
Licensing and insurance requirements vary by state, with Queensland requiring a QBCC licence for building inspections and other jurisdictions taking different approaches. Beyond licensing, real estate agents and conveyancers frequently expect to see a certificate of currency before referring work, so it is generally a commercial necessity as well.
What drives the cost?
Pricing generally reflects the number of inspections a year, the report types you produce, whether timber pest is included, the quality of your terms of engagement and report templates, the limit and excess selected and claims history. Dilapidation and defect reporting for commercial projects tends to be rated above standard pre-purchase work.
General information only. Cover, limits and exclusions depend on the PDS, TMD, eligibility, underwriting and the policy terms. See professional indemnity insurance for the wider picture.
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