Home inspectors should carry errors-and-omissions (E&O) insurance to protect themselves from lawsuits. Every time a home inspector writes a report, he or she is exposed to liability for an error or omission. That's why home inspectors use pre-inspection agreements and forms that tell buyers exactly what the home inspection does and doesn't include.
Also be aware of two potential ethical dilemmas: repairs and rebates. Some home inspectors offer to repair defects they've uncovered during their own inspections, and others give rebates or coupons to real estate agents as incentives for referrals. Anderson, Crawford and Ruiz all believe that such practices are unethical, although they are legal in some states. Check with local and state regulators to find out whether these practices are legal in your state.