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As a home inspector, your limitation of liability can simply restrict the price of liability to an amount equal to your inspection fee. This means when a client signs your pre-inspection agreement, they are agreeing that the maximum amount that you, the inspector, is responsible for is the total cost of the inspection. A vast majority of home inspectors choose this approach however; there are other ways to write this clause—especially depending on your state laws.
In his presentation titled “Sharpening Your Pre-Inspection Agreement,” Peck, points out that another way to approach the limitation of liability is to set a higher base amount for the limitation of liability. For example, instead of limiting the maximum liability to the inspection fee, you could set your maximum liability between $1,000 to $2,000, or even two or three times the cost of the inspection fee.
One reason you might do this is, it could be more defensible in court depending on the state law and precedent in your state. Peck points out that some states have completely banned the limitation of liability, or some have strict constraints around it. He uses California as an example. Their law states, “contractual provisions that purport to waive the duty owed pursuant to Section 7196, or limit the liability of the home inspector to the cost of the home inspection report are contrary to public policy and invalid.”
In other words, in California, it is against public policy to limit your liability to the cost of the inspection. However, you might have a more defensible argument if you limit your liability to $2,000, $3,000, or even $5,000. This is definitely a case of something being better than nothing—and is precisely why some inspectors may choose to set a higher price of limitation—some don’t even include a maximum at all.
Choosing how you outline a limitation of liability clause all depends on you, your business and your state laws. All of these are great options so be sure to consider all of your choices before writing your pre-inspection agreement. The next step is how to format the clause.