Covering Your Business: Insurance Basics and New State Rules for Arkansas & Iowa Inspectors

Staying protected is essential for every home inspector. During ASHI’s recent webinar, Covering Your Business: Insurance Basics and New State Rules for Arkansas and Iowa Inspectors, Aaron Menlove of InspectorPro Insurance joined us to break down new state requirements and share key risk management strategies to keep your inspection business secure.

New Requirements for Arkansas and Iowa Inspectors

Arkansas

As of August 2024, House Bill 1625 requires all inspectors in Arkansas to carry both errors and omissions (E&O) insurance and general liability (GL) insurance at a minimum of $100,000 each. Previously, only GL coverage was required. This change means inspectors must ensure their policies are up to date to stay compliant.

Iowa

Iowa inspectors face several significant updates under Senate File 460, effective July 1, 2024:

• Inspectors must maintain membership with a recognized national inspector association and follow its Standards of Practice.
• Inspectors are prohibited from offering repair services to clients for 12 months after an inspection, eliminating potential conflicts of interest.
• New insurance minimums require $500,000 in E&O and GL coverage, with a maximum deductible of $2,500.
• Sellers may now access inspection reports, but only with the buyer’s explicit consent.

These updates bring Iowa among the states with some of the most stringent inspector insurance requirements in the nation.

Why Insurance and Agreements Matter

Statistics show that half of all home inspectors will face a claim during their careers. Many of these are not due to negligence but arise from client misunderstandings, emotional real estate transactions, or frivolous complaints. That’s where strong insurance coverage—and equally strong pre-inspection agreements—become critical.

Aaron emphasized four essential protections to include in every agreement:

1. Arbitration Clause – Ensures disputes are resolved efficiently through a designated arbitration service, avoiding costly, drawn-out court battles.
2. Statute of Limitations – Limits the time clients must file a claim, often one year from the inspection date.
3. Limitation of Liability – Caps potential damages, typically at a multiple of the inspection fee.
4. Standards of Practice – Clearly defines the inspector’s scope of work and prevents liability for issues outside that scope.

Without a signed agreement in place before the inspection begins, these protections, and often your insurance coverage, may be void.

Risk Management Best Practices

Aaron offered several practical tips to reduce risk and strengthen protection:

• Always secure signed agreements in advance, ideally through digital tools like DocuSign.
• Store reports and records digitally for at least 7–10 years.
• Stick strictly to your Standards of Practice; don’t cross into engineering or contractor territory.
• Get coverage through InspectorPro Insurance with the ASHI Advantage to ensure your provider is familiar with home inspection claims and SOP defense.

The Bottom Line

Insurance and agreements aren’t just formalities; they’re essential tools for protecting your livelihood. With new state rules now in effect for Arkansas and Iowa inspectors, it’s more important than ever to stay compliant and prepared. By carrying the right coverage, following ASHI Standards of Practice, and securing airtight agreements, inspectors can focus on what matters most: serving clients with confidence.

Want to dive deeper? Watch the full webinar recording on ASHI Edge or connect directly with InspectorPro Insurance for coverage tailored to your business.