What does errors and omissions cover?
In short e and or protects something called work product.
You may be called a Home Inspector, but what you actually are is:
a home inspections report writer.
The home inspection is strictly a means to an end and the "actual thing" or product that is being purchased is the report that is generated and used by your customer to help them evaluate the home that they are looking at.
What e and o does is provide protection for you and your business from claims against you about how and what is in the report (errors and omissions). It is not a defense insurance policy, but a policy that will defend and indemnify you on covered claims arising out of a home inspection. report.
What are you measured against?
The SOP AKA the Standards of Practice. Many states have their own. If not the state standards, you probably have one of the National or regional Associations standards (ASHI, NAHI, INTER-Nachi, CREIA) They are generally very similar.
You are also measured against the Pre- Inspection Agreement you have the client sign before the inspection.
Because most home buyers do not have a clue as to what a home inspection is, what you do, how it is presented and how it should be used in the context of a home purchase.
Getting the PIA signed enlightens the customer as to what you will (and more importantly, what you WILL NOT do).
Including it in the report after the fact has been determined in many states to be coercive and in many cases the practice of including it in the report after the fact significantly diminishes the enforce-ability of the contract.
commercial general liability (CGL) policy. A standard insurance policy issued to business organizations to protect them against liability
claims for bodily injury (BI) and property damage (PD) arising out of
premises, operations, products, and completed operations; and
advertising and personal injury (PI) liability
Basically, if you damage people and property WHILE you are conducting the inspection, then this insurance will come into play.
In my ten years of experience, you are far more likely (100's to 1 odds) to have an e and o claim than a GL claims.