Insurance Companies want your inspection report – but do they have a right to ask for it?

This issue has come up several times recently and I wanted to address it once and for all. When you hire an inspector you will be asked to sign an agreement which explains the limitations and scope of the inspection.  Within most of these agreements will be a statement that says the report is for the sole use of the person who signs the agreement or their representative. This means the inspection report is a snap shot in time of the home and is only intended for use by the person that hired the inspector.

Recently I received a call from a distraught lady who said the insurance company asked for the report and once they  got it they  threatened to stop the insurance on  the property unless ALL the maintenance items were repaired as suggested in my report. When I heard this I was more then a bit upset for several reasons. First of all this customer has called me for three inspections in the past because she values how thorough I am. Now that the report is in the hands of the insurance company they are using it against her. Secondly they do not have a right to request the report for reasons mentioned above. Thirdly this company had been insuring this lady for several years on these properties already and now is threatening to drop her insurance if she doesn’t complete the repairs that were mere suggestions in the report. So be cautious who you give the inspection report to.

In my opinion the only time you should give the report to someone is if you back out of a deal as a direct result of the inspectors findings. After all you have entered into an agreement with the seller/buyer which states that the purchase/sale is “subject to” the inspection. If you decide to walk away from the home you have an obligation to explain to the other party what it is that has caused you to make this decision. I have had clients pay for an inspection just so they could use it as a loop hole to get out of the purchase.  Most homes are going to have some issues but few deals ever fall through as a result of the inspection.

Some people try to sell the inspection agreement to another person if they decide not to buy the home. This is not a good idea because the inspector will not stand behind the inspection with the third party as they have not entered into the agreement with that person. Furthermore the inspection may be old and several issues may have come up in the mean time, which were not in the inspection report. If the new buyer experiences a problem you may get a call as the inspector will not likely talk to the third party.