July, 2009
Ethics
Inspection News and Views from the American Society of Home Inspectors



Ethics Question About Agent Indemnification

BILL LODEN

The ASHI Code of Ethics Committee is charged with developing ethics education and awareness for ASHI members and answering Requests for Interpretation (RFI) of our Code of Ethics.

When serious questions arise about the intent and applicability of the revised code, members are encouraged to review previous requests and responses on the ASHI Members Only Web site under Resources.

If there has not been a request for an interpretation to a similar situation, please submit your question using the required RFI form, which can be found under Downloads/ASHI Forms & Documents.

We will continue to provide the members with the committee’s response to the questions posed by their fellow home inspectors. This response is based on the revised Code of Ethics, approved in June 2004.

– Bill Loden, chair, 2009 ASHI Code of Ethics Committe
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Request for Interpretation

e070622 Real Estate Agent Indemnification

When marketing inspection services to real estate agents and brokers, does promoting the fact that an inspector’s Professional Liability insurance includes an endorsement that indemnifies referring brokers and agents constitute direct or indirect compensation in violation of 1.C of the Code of Ethics? 

Response

The committee believes that the reduction of risk gained by a referring real estate agent or broker from a “limited additional insured” status provided by an inspector’s insurance policy, does not constitute direct or indirect compensation in violation of 1.C of the Code of Ethics. 

This limited indemnification coverage is provided only to the extent that the referring agent is held liable for the insured inspector’s errors or omissions.  While an agent may consider the indemnification to be an inducement to refer a specific inspector when he or she compares one inspector’s services with another, the agent gains nothing for referring an inspector who includes such indemnification, compared to making no referral at all.  The indemnification simply reduces the risk to the agent, as does referring the most thorough inspector.  Promoting the benefits and value of one inspector’s services over those of another to real estate agents does not constitute a violation of the Code so long as those advantages are represented honestly and do not include some form of direct or indirect payment for referrals.