What does liability insurance protect a real estate inspector against?

Liability insurance is crucial for real estate inspectors as it provides protection against various potential professional risks they might encounter in their work. The focus of this insurance is typically on covering claims that could arise from the services provided, including allegations of negligence, errors, omissions, or unforeseen issues that might occur after an inspection.

In the context of the options provided, the correct answer indicates that liability insurance primarily protects inspectors from lawsuits related to their inspection practices. This encompasses instances where a client may believe that the inspector failed to meet industry standards or acted improperly during the inspection, which could lead to financial damage for the client. The insurance serves as a financial safety net by covering legal costs and settlement payments if a lawsuit arises from these claims.

The other choices pertain to specific allegations or actions that are less aligned with the general protective scope of liability insurance. For instance, fraud allegations and claims related to prohibited acts are more concerned with intentional wrongdoing or statutory violations. In contrast, liability insurance explicitly addresses situations where inspectors are alleged to have acted negligently or made mistakes, underscoring its role in safeguarding inspectors from the repercussions of their professional responsibilities.