Article: How to protect your business when you refer clients to outside inspectors or contractors

Hi Home Inspection Forum!

Stephanie here with InspectorPro Insurance. We're excited to see many of you at Inspection Super Conference this week. Let us know if you have any questions about our risk management education in-person at our booth or in the comments. I'm posting an excerpt of our most recent article below.

For those of you who don't know, we've been putting out a bunch of educational material for home inspectors, and we'd love to share it with you. You don't have to be insured with us (or insured at all) to benefit from most of the articles, which focus on risk management and business growth. Find an excerpt from our most recent article below. And tune in about twice a month for new articles.

Enjoy!

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How to protect your business when you refer clients to outside inspectors or contractors

Try as you may, you can’t always be a one-stop shop. Maybe your inspection business is still small, so you don’t offer many additional services beyond the basic inspection. Or maybe your client needs something that goes beyond the Standard of Practice (SOP). Regardless, if you’re unable to meet a client’s needs in-house, you’re likely to refer them to someone else.

But did you know that referring clients to other businesses incorrectly could put you at unnecessary risk?

Learn how additional insured endorsements can protect your inspection business from claims against the companies to whom you’re referring business.

What’s an additional insured endorsement?

When you refer business to another company, you expect them to perform quality services for your clients. But what if the business who received your referral made a mistake or performed poorly? If the client went so far as to file a claim against them, what’s stopping them from blaming you, too, for making a bad recommendation?

That’s where an additional insured endorsement comes in.

Whenever there’s an additional insured endorsement, there are two parties at play: the additional insured and the named insured.

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Another great article full of information and tips, good read.

Thank you!

I am intrigued. Wouldn't a letter of indemnification between the two companies also be beneficial?

Scott,

Great question! Your contract with you and the referral partner (if money is exchanged) needs to have the indemnification aspect. We would recommend that, if you are sending along a referral, you have a contract and it has an indemnification clause.

Hope that helps!

Stephanie