Building inspectors conducting pre-purchase inspections to AS 4349.1–2007 are exposed to a high number of professional indemnity (PI) claims in Australia due to several recurring risk factors:
1. Missed Defects
- The most common cause of PI claims is failure to identify or report major structural issues (e.g. termite damage, subsidence, roof faults).
- Buyers rely heavily on these reports and may sue if defects are discovered after settlement.
2. Inadequate or Vague Reporting
- Use of ambiguous language (“minor cracking observed”) or failure to recommend further inspection can lead to claims.
- If inspectors don’t clearly highlight risks or limitations, clients may claim negligence.
3. Inaccessible Areas Not Properly Noted
- If parts of the property were not inspected (e.g. roof void, subfloor) and this wasn’t properly documented, the inspector may be liable for omissions.
4. Lack of Supporting Evidence
- Failure to include clear photographs and detailed comments in the report makes it harder to defend a claim later.
5. Misinterpretation of AS 4349.1 Scope
- Some inspectors overstep the standard (e.g. making structural or pest assessments) without proper qualifications or try to go beyond a visual-only inspection, which can backfire if they miss something
6. Clients Expecting a Warranty
- Buyers often wrongly assume a building report is a guarantee, not an opinion based on a moment-in-time inspection.
- This misalignment of expectations frequently leads to disputes and litigation.
7. Claims Arising Years Later
- Claims may emerge years after the inspection, especially when structural problems or pest damage become evident over time.
Why PI Insurance is Crucial
- Professional Indemnity insurance covers:
- Legal defence costs
- Damages awarded
- Claims alleging negligence, misstatements, or omissions