I'm a newbie, so you will have to take my comment with a grain of salt. I was taught that a home inspector is like a general practitioner, if you see a problem refer the client to a professional. In the case of the furnace, if the inspector did not see a problem and it was working, then he did his job. His report reflects his inspection of the day. If it does not work or blows up the next day, it is not his fault, but it is the fault of the previous owner. If the lawyer comes after you, tell him if he is good, he should be able to get the house for free and not bother with your EO insurance. You the home inspector are small fry compared to the previous owner.