What liability does an aviation inspector have for errors & omissions? In reading online, I've come across the term "pencil-whipping". The actual term is new to me but I'm familiar with the practice; it's when someone fills out the paperwork that attests something is true, without actually verifying it himself (at least not to the standards required). Technically that's fraud, but it's also usually a "who'll watch the watchmen" situation; if you don't know what the guy is required to do and watch him do it, or else call in a second opinion, you won't know anything's been skipped.

I purchased a home a few years ago, and the home inspector did a good job of finding the things we'd have to get fixed. If he hadn't though, State of Texas requires these inspectors to have "errors and omissions insurance" on top of a "general liability" policy. If the inspector said he has checked something though he didn't; or he made a mistake checking it; or he didn't check something he was supposed to, he and his insurer are liable for any damages resulting from the new homeowner trusting that report. This generally discourages pencil-whipping in the home buying industry, as after the first instance of the insurer having to pay out for an electrical fire caused by an outlet the inspector attested to be fine, the guy's likely out of a job.

The question here is, do A&amp;Ps in the United States carry a similar liability? If I were to hire a guy and pay him thousands of dollars for a pre-purchase inspection of an aircraft, get the all-clear, buy it and then find out the aircraft actually isn't airworthy because of something he missed, what recourse do I personally have against the inspector? How would I report this misfeasance and to whom? Assuming nobody was hurt and I just have a loan payment on a museum piece (or a fat unexpected repair bill), what damages can I claim?
I only can speak for Canada but we use much of the American regulations in Canada as part of our regulations. In Canada, all mission critical systems Ie flight control systems etc ... have to be signed off by 2 inspectors for a total of 3 people working on the system. The maintenance engineer will sign of there own work and the inspector will sign off the inspection. A second inspector will sign off the secondary inspection. So typically if there is an error one person is typically not solely responsible for it. Additionally all inspectors and maintenance engineers licenses are only valid while working for a maintenance organization AMO. The organisation's insurance typically covers the employees working for them. When I went through my licensing I was told that we could still be held liable for criminal prosecution if we were willfully negligent. It was explained to us this only incurred once previously.  If memory serves me correctly it was the mechanic responsible for a plane that went down in the Florida everglades.