Thread: TREC Inspectors Price Increase

I was thinking how the new insurance requirement will work. Will inspectors with licenses that dont expire until August 2008 keep their rates the same and be competing with folks whose licenses expire in September 2007 that will have to raise their rates to offset the cost of their newly mandated insurance?

It seems that there should be somewhat of a push by all inspectors to raise their rates in September 2007 to level the playing field. I know, sounds utopian. But we are all somewhat selling the same service and people are price shopping.

What do my peers intend to do? For me, my license wont expire until late 2008 (before Sept), so I have a while to figure out how I'm going to approach this.

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When mandatory E&O happened in the two states that I'm now licensed in, I did not notice a drastic increase in prices across the board.

I noticed that the lower priced or smaller homes stayed about the same and the pricing on the larger more expensive homes went up. I would say that on the average the rates went up $25 to $40 on the larger homes. The higher end home market can absorb the cost better than the lower end.

I agree Scott.

The guys that do a lot of inspections can have a lower increase per house because they are doing more homes. Its the guys that are trying to "part time" it that are going to have the biggest struggle with this.

In other words if I am paying 2000 per year for insurance and do 400 inspections per year, my cost is roughly 5 extra per home. Of course you would want to increase more to pay for the cost of your initial outlay.

Someone doing less will have a higher cost per home.

Not to mention that the insurance is certainly going to based on how many inspections you have performed. This is where theres going to be a huge difference in cost of insurance for seasoned pros vs newbies.

John, I am in a similar situation since my license is good until late 2008... BUT did you read the inner page explanation in the TREC Adviser?
There was a little tidbit in there about having to show proof of continuous coverage when you renew. I know the law says one thing, but the bureaucrats in Austin may have a different trick up their sleeve. It MAY mean everyone will have to show proof of coverage beginning Sept. 2007.
Right now it seems there are more questions than answers out there, but maybe it is just me.

Originally Posted by Jim Luttrall

There was a little tidbit in there about having to show proof of continuous coverage when you renew.

Typically, that would take effect on the following renewal.

How can you have "continuous" for a requirements which "just started"? You can't.

However, for the following renewal, you will have to show proof of "continuous coverage", i.e., that you did not put down a deposit to get your insurance certificate for your renewal, then let it lapse, then, put down another deposit for your next renewal. They want to see that you 'kept the policy in force' "continuously".

'Course, you Texans do things differently, so maybe they want "continuous coverage from birth"?

Now, here's another question for you guys:

The license is a personal license for the individual to perform home inspections, and, one of the posts noted that the 'business license law has been repealed'.

The question is: Is the E&O policy for personal coverage for "yourself", or for "the business" (which does not require a license nor coverage)? Will a policy which "covers the business" equate to 'the home inspector having an E&O policy'?

I've had E&O insurance since early 90's. It has always covered ME, and not the company per se. While I do list on the application, the compnay name, the application and coverage is for ME. When I add people that work for me, I add their names.

Since my application has me name as well as the company name, I am covered if either one is named in a lawsuit.

I'm not sure I could get a policy that covered just the business with no names included.
JF

By the way. My prices have reflected my costs for doing business since the start - sharpened after doing Brian's "Cost of doing business" program.
JF

Jack,

Then, the reverse question ... is your business covered? Would the 'business' be at risk of losing it all due to a claim?

Since TREC is requiring E&O at a minimum coverage of 100K, I was curious of anyone has priced shopped a policy yet?

What is the going rate for such?

Originally Posted by Rick Hurst

Since TREC is requiring E&O at a minimum coverage of 100K, I was curious of anyone has priced shopped a policy yet?

What is the going rate for such?

Most of the coverage that you can get starts at $250K and the difference between a $250K policy and $1M policy is not all that much. I think it cost me $400 more for $1M in coverage vs. $250K. I'm changing from FREA to either BRP or Allen this year.

It looks like TAREI has decided to try and pursue a temporary restraining order against the insurance requirement.

I think that this may actually have some chance of delaying its implementation. A permanent revocation of the insurance requirement however would require a favorable act of legislation in the next session. I believe that this is also a possibility (though certainly not a sure thing).

In any event, here's an email that was sent out by TAREI president Danny South today...

---------------------------------------------------------

Esteemed Colleagues,





As previously stated to the general membership, the ramifications of SB914 will forever change the Inspection Industry in Texas. TREC has already implemented an interim policy on June 4th to precede with E & O requirements effective September 1st. They have also requested an opinion from the Office of the Attorney General (OAG) regarding:


“Whether an applicant for a home inspector license is required to carry general liability insurance, professional liability insurance, or both”.


Considering the specific language of the Texas Occupation Code sec. 1102 Subchapter G (page 39), the three key words that, in my opinion, will more than likely require the OAG to render its opinion as to the type of insurance being E & O are: “Incompetence, Negligence & Deceit”. All TREC Commissioners at their June 4th Meeting were in agreement.


That said, this will set a precedent for all licensed Professionals in Texas on insurance matters. This precedent will obviously cost a conservative estimate of 500 Texas Inspectors their livelihoods. If E & O is obtainable, the costs will be passed on to Consumers but, more importantly E & O insurance simply does not protect the Consumers of real estate.


So, what do we as an Industry do? Considering the posting of Gov. Rick Perry on June 15th, his comments give us hope. More importantly, the Governor’s own words give us “teeth”. Teeth to pursue litigation to obtain a temporary restraining order (TRO) from the OAG. If successful, I am told that a permanent injunction can be obtained relatively easily.


On June 4th, I requested Andrea to send out an email to all Chapter Chairmen to poll their respective Chapter memberships around the state regarding possible donations. With all the replies and believe me, a strong number was received, the numbers in support of financial pursuit thru the OAG was approximately 70% “in favor”.


Yes, we had a few members who were adamant of not pursuing but, I have fiduciary obligation to the Association and our membership to vehemently pursue. And what about the remaining voices of the Inspection Industry not affiliated with TAREI?


Considering the fact that TAREI is known as “the voice” of the Inspection Industry in this state, shouldn’t we all take a stand? Does this not affect every single Inspector in this state? Short answer…a resounding “YES”.


I could spend another couple of hours on this email but…tick, tick, tick. Time is of the essence to pursue. Your Board is simultaneously working on several emergency-based projects due to the amendment to SB914 for its members.


· We are currently working on a “standardized” Pre-Inspection Agreement

· We are currently working with numerous E & O Carriers to obtain the best possible rates for its members

· We are interviewing Attorneys who have experience with dealing directly with the OAG

· We are about to start the initial steps on filing the Lawsuit to hopefully eliminate the required E & O


As you can see, this has been a truly monumental task for this Board. At the San Antonio Conference, walk up, give them a handshake and a word of thanks. Trust me, we’ve earned it.


I have requested a separate account be setup thru our financial institution for these donations. This account is “earmarked” for OAG litigation purposes only. As per the email on June 4th, we are looking for donations starting at $ 100. The monies sent to the TAREI office should include information such as: TAREI-OAG Fund, or OAG Fund at the bottom so we disperse every penny into this Special account.


Budgeting. We have received various opinions as to the approximate costs. The estimates provided to date on the TRO is ranging from $ 7,500-$ 10,000. The permanent injunction is truly an “unknown” considering we are chartering new waters with this type of suit. But again, considering the fact that the OAG will have to defend this position, it is my opinion if and when the TRO is issued, a permanent injunction should follow shortly and, without a great deal of additional expense. But we are only guessing at the total costs on a permanent injunction at this time.


Your donations are needed now. Once a Law Firm is selected, a Retainer will be forthcoming. Then, the ball is rolling. Please take the steps necessary to protect yourself and your Industry.


Thank you.


Sincerely,
Daniel F. South
TAREI President 2007-2008
----------------------------------------------------

Jerry,
I guess I had it partially wrong. Looking at my policy, it is actually in the name of the business, and NOT in my name. I am listed under Home Inspector Additional Insured endorsement.

JF

Jack,

While that works for you, and is 'effectively the same' as insuring the inspector, there is a technical difference in the wording, and that 'might not fly' with a state trying to use that as leverage for fines or to turn down renewals.

Just bringing up food for thought.

Thank you for checking and letting me/us know.

Thanks for posting, Phillip. I was going to. I do think the TAREI board has shown courage. For all of you who are not TAREI members, please join us in this effort.

Will you be at the San Antonio meeting next Friday?