According to Spencer, in addition to covering property damage and bodily injury which might occur during an inspection, the FREA policy provides coverage for damages which might occur after the inspection as well. Say a furnace malfunctions six months after the inspection date causing bodily injury to the homeowner. If the homeowner sues for damages due to injuries sustained by the furnace malfunction, alleging the inspector's report did not indicate a defective furnace, the FREA policy will defend and pay any judgement. The FREA policy is as good as any general liability policy available to home inspectors today. We realize that insurance is an intangible product.
Many people regard it as little more than a necessary evil.
Unfortunately, the false economy of purchasing only errors and omissions coverage, without purchasing a general liability policy, is often not realized as a tragic mistake until it is far too late. No insurance carrier will sell an insured a policy retroactively to cover a loss that has already occurred. This flies in the face of the insurance mechanism and guarantees the carrier will lose money on the product line. However, we cannot over-emphasize the importance of purchasing both policies. We have seen lives and businesses destroyed by losses where there was no coverage in place.