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  1. #1
    flyguy26's Avatar
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    Default Have you been sued for E&O?

    I've been reading the posts related to E&O insurance and the consensus seems to be that general liability is more crucial.

    It lead me to wonder...has anyone here been sued under their E&O policy? For how much? What was the result?

    I live in Virginia and am a relatively new inspector. The price of E&O insurance is crazy!

    Just wondering what the sages here think...

    - Mitch

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  2. #2
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    Default Re: Have you been sued for E&O?

    Quote Originally Posted by flyguy26 View Post
    I've been reading the posts related to E&O insurance and the consensus seems to be that general liability is more crucial. It lead me to wonder...has anyone here been sued under their E&O policy? For how much? What was the result? I live in Virginia and am a relatively new inspector. The price of E&O insurance is crazy! Just wondering what the sages here think...- Mitch
    Mitch,

    In general, I think that most of us will tell you that there are two kinds of inspectors. Those that have been sued and those that are going to be sued. I carry E&O. I see it as a part of doing business. If you don't carry E&O you take a bigger risk.

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  3. #3
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    Default Re: Have you been sued for E&O?

    I carry GL but not E&O.
    For what E&O cost over several years and then with the high deductables, Paying claims out of pocket is still better.

    ' correct a wise man and you gain a friend... correct a fool and he'll bloody your nose'.

  4. #4
    Roger Ormiston's Avatar
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    Default Re: Have you been sued for E&O?

    I never carried E&O until the state of Texas made it mandatory. I've been in business for over five years. I get an average of one complaint per year, and I respond personally to each one immediately. I've refunded two inspection fees and paid for a couple of minor repairs. Give your clients a thorough inspection with a detailed report. Make a personal connection with each one. Squirrel away about 5% of each job for the occasional nut-ball who'll sue his own mother.


  5. #5
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    Default Re: Have you been sued for E&O?

    Have been sued for a latent defect.
    Plaintiff was seeking $65K.
    Insurer settled for $22K post discovery.
    $2500 deductible
    Rates went up.

    Do not carry E&O any longer because the insurers most always pay out due to economics. Then turn around and claim inspectors are bad risk.

    Premiums are unrealistically high.


  6. #6
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    Default Re: Have you been sued for E&O?

    Some of us have no choice about carrying E&O. It's mandatory in PA.

    I've been in business for about 7 years, and I've been threatened a couple of times (to be sued, not physically), but nothing ever came of them. Often the attorney is employing the shotgun effect, threatening everyone involved in the transaction, hoping someone will cough up some dough.

    It's my understanding that the insurance companies generally roll over and settle most cases to avoid the cost of litigation.

    And I can't really imagine paying for any "minor repairs", since PA law says the home inspection's purpose is to identify problems that would have a significant impact on the value of the property or pose an unreasonable risk to persons on the property. It's not about "minor" stuff.

    Remember, you don't have to do anything wrong to be successfully sued. Life ain't fair.

    "There is no exception to the rule that every rule has an exception." -James Thurber, writer and cartoonist (1894-1961)
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  7. #7
    Roger Ormiston's Avatar
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    Default Re: Have you been sued for E&O?

    I pay for the "minor repairs" more for marketing reasons than obligation. When my clients see that I take responsibility for something I missed, they tend to refer me to friends and family. Especially when I begin the dialogue by explaining why I'm not required to.

    On the other side, if I just tell them "tuff doo-doo" they will more likely bad-mouth me to everybody they meet, and may file one of those e&o claims that the insurance company is likely to pay, even though I'm not legally responsible.


  8. #8
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    Default Re: Have you been sued for E&O?

    In my experience dealing with complaints right away by returning to the property is most effective. Not dealing or giving the client the cold shoulder is a powder keg.


  9. #9
    Ted Menelly's Avatar
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    Default Re: Have you been sued for E&O?

    Quote Originally Posted by Gunnar Alquist View Post
    Mitch,

    In general, I think that most of us will tell you that there are two kinds of inspectors. Those that have been sued and those that are going to be sued. I carry E&O. I see it as a part of doing business. If you don't carry E&O you take a bigger risk.
    I carry E&O but I must say this

    Either you have been sued or are going to be sued.


    Really. The amount of inspectors out there compared to the actuall suits over time..... That tells me something completely different. To be sued is the extremely rare case, not the norm or soon to be norm.

    Do I think it is a good idea for some form of insurance protection? Sure!

    Do I think all or even most or even 10 percent of home inspectors (that is 100 per thousand) will have an E&O claim....No. The figures are just not there.

    Will someone pay out a small pitance over time to get someone to go away...sure.


  10. #10
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    Default Re: Have you been sued for E&O?

    Quote Originally Posted by flyguy26 View Post
    I've been reading the posts related to E&O insurance and the consensus seems to be that general liability is more crucial. - Mitch
    Hope you have seen this CBC Video or CBC News that a Vancouver inspector pay $200,000 for his "errors". See my blog or other thread for more related news to this case.

    I have a case in 2003, the only one in 15 years with 1M E&O & 1M GL insurance. Because my thorough inspection and detail report, the buyer's lawyer gave up after 2 years, just a week before going to the scheduled Supreme Court. I had prepared to fight back in the court, but rejected by my insurance company due to cut cost. It wasted my insurance company ~$25,000 for my defence lawyer fees. I only got a personal apology letter from the buyer, but I lost $2,500 deductible to the insurance company and lots of my time within that 2 years.


  11. #11
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    Default Re: Have you been sued for E&O?

    Quote Originally Posted by Daniel Leung View Post
    Hope you have seen this CBC Video or CBC News that a Vancouver inspector pay $200,000 for his "errors". See my blog or other thread for more related news to this case.

    I have a case in 2003, the only one in 15 years with 1M E&O & 1M GL insurance. Because my thorough inspection and detail report, the buyer's lawyer gave up after 2 years, just a week before going to the scheduled Supreme Court. I had prepared to fight back in the court, but rejected by my insurance company due to cut cost. It wasted my insurance company ~$25,000 for my defence lawyer fees. I only got a personal apology letter from the buyer, but I lost $2,500 deductible to the insurance company and lots of my time within that 2 years.
    Sad... But Looks like you came away a better man... And thats a good thing.

    best

    Ron

    Last edited by Ron Bibler; 03-14-2010 at 07:05 PM.

  12. #12
    John Remark's Avatar
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    Default Re: Have you been sued for E&O?

    John Remark from First Indemnity Insurance here--

    A couple of things regarding insurance costs and claims frequency.

    1) The cost for E/O for HI's has gone down dramatically in the last 3 years. If you have not looked recently, I believe you will be pleasantly surprised.

    2) I cannot speak for other carriers or programs, but our claims history has been about 6% of our clients get a claim/yr.

    3) Not every claim becomes a payable event. Many claims are reported to the carrier (as is required), but because the HI knows what he is doing, has a pre-inspection agreement signed before the inspection, takes pictures of all aspects of the inspection...(read has done a good job), many of the claims go away with client meetings. Of the claims that get paid out, our average indemnification is above $15K (legal costs are above that).

    4) Claims run the gamut in cost: From as little as $500 to as much as $500,000. Our largest claim to date is about $250,000 (and it is not over yet and has been going on for 3 years).

    5) a small business attempting to self insure will protect you for about 65% of the problems. The other 35% will have a dramatic impact upon you, your business and how you live your life after.

    6) Buying E/O insurance protects your clients, protects your business and provides a wellspring of experience that you and your local lawyer do not have. We are specialists that have trained counsels around the country that defend this type of case all the time. It is impossible for you to match our experience and expertise.

    7) I know that many of you are upset that the decisions to settle or defend the cases are made on an economic basis. This is the reality. Remember, insurance is shared risk. All members agree to put some money in the pot and if needed, can use it. If we defend every case to the "fare the well", e and o insurance would be out of reach for most people. That is why it is important to read the exclusions and make sure that the policy you are buying is right for you and your business.

    8) Insurance is a way to manage expenses. Most HI's are going to have a payable claims event during their business's life. You can choose to save and self insure, hoping that what you have will be enough. Or you can buy insurance on a regular basis and have a much deeper pocket to protect you and your business. Business decision.

    9) Most HI's will be able to handle the claims that are brought against them, some will not. The problem is, you do not know what your claim will be. the %'s are in your favor. But every week, someone wins the lottery and every week someone gets hit by lighting. No one can predict who where or when. Insurance makes this uncertainty more manageable.

    I hope this has helped a little. I am sure that more questions will be asked because of it. In the end, buying insurance is a philosophical decisions. Do you want to gamble with your business, or do you want to play it safe. The only person that can make that choice, is you.

    Thanks for reading and have a great day.

    John Remark
    First Indemnity Insurance
    john@homeinspectorliability.com


  13. #13
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    Default Re: Have you been sued for E&O?

    Quote Originally Posted by Daniel Leung View Post
    Hope you have seen this CBC Video or CBC News that a Vancouver inspector pay $200,000 for his "errors". See my blog or other thread for more related news to this case.
    Ok, the inspector only spent 1/2 hour at the inspection and he provided cost estimates. Sounds like this fella got what he deserves.

    The inspector interviewed by the News said he thinks an inspection should take a full day. Well at least the news covered to the two extremes, 1/2 hour or a full day.

    "The Code is not a peak to reach but a foundation to build from."

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    Default Re: Have you been sued for E&O?

    I wish it where as cut and dried as that. But the inspector could have limited his losses had he had the contract read and signed prior to inspection and wherein the contract stated prices where quoted where approximate.


  15. #15
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    Default Re: Have you been sued for E&O?

    If the homeowner had contacted a contractor for a quote, the contractor would have taken measurements, gone to his office to get material quotes, quotes from a truss manufacturer etc, estimate the amount of labour required and THEN given the owner a quote. There is no way a hi can give an estimate on something complex like that during the few hrs he is at the home.
    Would any of you put an estimate in your report? (I wouldn't.) If the client wants to know how serious the problem is, would any of you give him an idea by saying something like; it could easy cost you $20.000 (but not include it in the report?)
    I also wonder how many things got "repaired" that had nothing to do with the problem the hi reported on. $200.000 will put a pretty nice roof on a house.


  16. #16
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    Default Re: Have you been sued for E&O?

    John,Thanks for your reply. It's interesting to look at claims from your prospective. This board could benefit greatly from hearing from your input on customer complaint issues. I hope you stick around.


  17. #17
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    Default Re: Have you been sued for E&O?

    I give rough quotes all the time but I am also quick to tell the client its very rough because I am not a contractor and that prices could vary upto 300% due to many factors. Even contractors prices will vary widely.


  18. #18
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    Default Re: Have you been sued for E&O?

    Hi all this is David Brauner, principle of OREP.org/David Brauner Insurance Services.

    I think the comments here are very thoughtful, overall, and speak to all sides of the insurance argument. Let me add just a couple of thoughts. 1) In my 16+ years serving your profession as an insurance agent, I have seen plenty of folks get sued who did not have insurance. That can be catastrophic.

    2) I have seen many (many) hundreds (and hundreds) of E&O insurance claims and two general liability claims I can recall.

    3) Many companies will aggressively defend an inspector when they can and many times this stops frivolous claims in their tracks. Below is a link to an actual claim rebuttal letter we ran as a story in our publication Working RE magazine (link below). If the link doesn’t work, go to Appraisers Errors & Omissions Insurance - Real Estate Home Inspectors Liability E&O Insurance and scroll down under “Related Stories from Working RE”; it’s the 5th bullet down: “Claim Rebuttal Letter.”

    E&O is more affordable these days, and many companies, such as OREP, offer low, affordable rates, broad basic coverage and financing options. Thank you.

    David Brauner, Calif. Insurance License #0C89873.

    Real Estate Appraisers and Real Estate Home Inspectors Errors and Omissions Insurance: Claim Rebuttal Letter


  19. #19
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    Default Re: Have you been sued for E&O?

    When it comes to GL or E&O insurance

    Like the commerical says, "Don't leave home without it!"


  20. #20
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    Default Re: Have you been sued for E&O?

    David,

    Out of interest what if the client feels they have grounds to prove that the inspector was negligent, and failed to have the client review the contract prior to start of inspection disclosing the limitations and caveats mentioned in the letter of retort (Claim Rebuttal Letter)?

    In my estimation that letter doesn't mean much in stemming a suit. At what point does the insurer roll over and offer the plaintiff a sum to avoid court?


  21. #21
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    Default Re: Have you been sued for E&O?

    Quote Originally Posted by David Brauner View Post
    Many companies will aggressively defend an inspector when they can and many times this stops frivolous claims in their tracks.
    Not trying to start a pissing match but this sure sounds like a lot of insurance company double speak.

    "Many companies" could mean the majority WON'T which has been my experience.

    "When they can" is really just fluff. The determination of "can" is entirely up to the insurer who, as we all know, 9/10 (or more) will just pay out $5K on a ridiculous claim knowing they get half covered by the deductible right away and will get the other $2500 over the next couple years or less in raised premiums.

    "many times this stops frivolous claims in their tracks" - Really? Many compared to what? "Many" could be 3....... out of 10,000.


  22. #22
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    Default Re: Have you been sued for E&O?

    I've had E&O since 1992, and now I'm required to have it in TN. I had it before I was required to for business reasons. I felt it was the right thing to do.

    I've worked as a EW on several home inspector lawsuits. I think home inspectors are sued a lot more than some believe.

    Self insurance might be a smart way to go, if you could limit your claims to a new roof, or some HVAC repairs. However, we never know whats going to happen, and what will trigger a lawsuit. I had insurance (before I was required to) to protect me for the BIG stuff.

    One lawsuit I worked on years ago involved a head injury to a college professor.


  23. #23
    Michael Garrity's Avatar
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    Default Re: Have you been sued for E&O?

    "John Remark from First Indemnity Insurance here--

    A couple of things regarding insurance costs and claims frequency.

    1) The cost for E/O for HI's has gone down dramatically in the last 3 years. If you have not looked recently, I believe you will be pleasantly surprised."


    John,what would someone pay for E&O in NY?



  24. #24
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    Default Re: Have you been sued for E&O?

    This is a good constructive discussion and I am happy to see some insurance reps chime in. It gives you the chance to see it from a different perspective. In my opinion EVERY inspector regardless of state regulation should have some insurance even if it is $100,000.

    More importantly, make sure your biz/company is seperated from your personal assets, such as an LLC or Corp. I have spoke with an attorney who is also a personal friend of mine many times about this, and you can technically as a business owner (may vary sate from state) file bankruptcy on your business or walk away from the company without it affecting your personal life and assets and never pay on a judgment, and legally there is nothing a person can do unless you have large assets tied to the business. Now take in to consideration you may never be in business again and lose your tools etc/ but in my opinion this is even more important to have done than just insurance, but if you plan on staying in business be smart:

    1) Have your company formed as an LLC or Corp, a seperate entity

    2) Have some insurance even if you can't afford large amounts of it. I have found insurance providers with $1500.00 deductibles for $100,000 E&O and $100,000 G&L for $1300-1600.00

    3) Always have your client sign a good, comprehensive Inspection Agreement and make sure you review it with them section by section, line by line and have the client's initials in multiple areas, signatures, printed names, date, etc. You can never go wrong with more areas of signature and acknowledgment.

    4) Always provide a copy of your inspection agreement to your client with the inspection report, never miss this part it is very important. Every insurance rep I have spoke with or every lawsuit I have reviewed involving HI's many of them poorly review the inspection agreement with the client and do not provide a copy of it to them.

    5) Explain your limitations to the client at the beggining of the inspection and after the inspection, including when reviewing the inspection agreement with your clients. In essence 3 time, drill it into their head.

    6) Have a great inspection report with your limitations in it and provide an area where your client(s) can access the Standard of Practice to which you adhere to or a direct link to your SOP or provide the actual SOP in your report.

    Over the last 2 years of using the plan above I've received about one call each year which is for very dumb items, but as expressed by someone earlier, I'll usually explain my limitations to the past client again, express the inspection agreement that they signed and reviewed with me at the inspection and my maximum out of pocket requirments and refund them the inspection fee, or pay for a new whatever it might be. This is to ensure I don't lose a good referral and they don't bad mouth me to other people. It has been said it takes 9-10 new clients for every 1 unsatisfied client because they have just bad-mouthed you to their friends, family, and so on. Ok, now im done. Just my 2 cents.

    Last edited by Randy King; 03-10-2010 at 07:03 AM. Reason: addition

  25. #25
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    Default Re: Have you been sued for E&O?

    By the way, for those of you who have been in the business a while and have received calls from past clients....what is it usually for, how often do you get calls a year if you were to average it, and what is your protocol?

    Just curious how others are dealing with complaints and what your coursce of action is. Thanks in advance.


  26. #26
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    Default Re: Have you been sued for E&O?

    Quote Originally Posted by Randy King View Post
    By the way, for those of you who have been in the business a while and have received calls from past clients....what is it usually for, how often do you get calls a year if you were to average it, and what is your protocol?

    Just curious how others are dealing with complaints and what your coursce of action is. Thanks in advance.

    I refer them over to my personal secretary, Helen Waite.

    If they have a complaint, go to Helen Waite.

    No seriously, I've learned if it is best to handle a complaint is within the first 24hrs. Most you'll find are covered on your report, but the client either did not fully read the report or they claim they didn't think it was important. I always explain I'm sorry they might be experiencing a problem and being out of some money for a repair but I did my job and leave it at that. Welcome to Home Ownership 101.

    rick

    Last edited by Rick Hurst; 03-10-2010 at 04:32 PM.

  27. #27
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    Default Re: Have you been sued for E&O?

    Randy
    "1) Have your company formed as an LLC or Corp, a seperate entity"

    Yes, an LLC may provide you with some protection.
    However, it is very likely that the LLC and the inspector that preformed the inspection (YOU) will be included in the claim.

    "5) Explain your limitations to the client at the beggining of the inspection and after the inspection, including when reviewing the inspection agreement with your clients. In essence 3 time, drill it into their head. "

    I explain:
    " My attorney tells me he has done everything to protect me, an nothing for you."

    ' correct a wise man and you gain a friend... correct a fool and he'll bloody your nose'.

  28. #28
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    Default Re: Have you been sued for E&O?

    Quote Originally Posted by Randy King View Post
    By the way, for those of you who have been in the business a while and have received calls from past clients....what is it usually for, how often do you get calls a year if you were to average it, and what is your protocol?

    Just curious how others are dealing with complaints and what your coursce of action is. Thanks in advance.
    I've gotten six or eight over the past 9 years from customers. I ended up paying out of pocket to correct on a three of them, there were a couple where the customer didn't read the report in full.

    There were two or three from the customer now selling where the new buyers had an inspection,on both of them the inspector I guess didn't have a clue, and recommended futher evaluation on some thing that was OK.

    On the other side of my business , new home warranty inspections, i've lost count of how many time I had to set a builder customer service rep straight, by simply letting him, her know. This is why the item needs to be corrected, I dont care how much it will cost you to correct the defect, I don't care how long it will take to correct the item, I don't care if you have to pay for a motel and meals for the customer, and don't care how much of a mess it will make to correct the item.
    After we get that resolved, I then in a nice way I ask him, or her,
    like me you are also working and looking out for your customer best interests, aren't you?
    I figured out real soon, don't recommend futher evaluation of an item by the builder
    99% of the time the customer comes out the winner.

    Last edited by Dan Harris; 03-10-2010 at 05:02 PM.
    Phoenix AZ Resale Home, Mobile Home, New Home Warranty Inspections. ASHI Certified Inspector #206929 Arizona Certified Inspector # 38440
    www.inspectaz.com

  29. #29

    Default Re: Have you been sued for E&O?

    Many times. But one case which was appealed by the other side makes me sure that I did the correct thing by having E&O. One of my employees missed some old termite evidence and it was still active. (We gave a guaranteed termite inspection with the HI) I offered the owner the cost of treatment, $2,500.00. She sued. (Long story short) After she refused the payment she claimed other stuff for many, many, big bucks. 5 day trial before a jury. I had two atty's for five days. She had three for three days and brought in another expert for two days making is 4 on her side. The jury awarded her $2,500.00. She appealed the decision to the state court making the case a precident case. She lost the appeal, the award was upheld for $2500.00.

    Now, I don't know how much she paid her lawyers, but I know that if I didn't have insurance willing to fight I would have had a large bill from a 5 day trial. Insurance rules. If you are in this business as a business then the cost of insurance needs to be a part of your cost of doing business. It would be a shame to lose your home and life savings over a grand or two a year. If you can't afford it then you probably do not belong in the game.


  30. #30
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    Default Re: Have you been sued for E&O?

    Randy King- excellent advice. I couldn't say it any better.

    The only comment I would add is to respond to complaints quickly, professionally and courteously.

    The following is not really "insurance agent" advice but as crazy as it sounds, there have been studies indicating that people are less likely to sue someone they like (and more likely to sue someone they don't like). I think there is some truth to this.

    Brian graciously posted a recent story of mine at the bottom of the main page in "Articles from the Inspection Community" about responding to incidents and claims. I don't think many inspectors know some of the info. here. Enjoy!


  31. #31
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    Default Re: Have you been sued for E&O?

    Hey David very good information and valid points. When ever I have received a call, I tell them I understand and I will do my best to take care of the problem...and I take care of it as quickly as possible. Usually refunding the entire inspection fee or most of it, satisfies the homeowner. Many homeowners will just turn over large repairs or problems to their homeowners insurance and if you can help them with their deductible or pay all of it and do it quickly and have them agree what you are doing is fair, chances are you will never hear from them again. Apologizing, always helps too. Most people just want to hear you say sorry and be genuinely helpful. Good points though David! Nice to see others chime in.


  32. #32
    Ted Menelly's Avatar
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    Default Re: Have you been sued for E&O?

    Quote Originally Posted by Rick Hurst View Post
    I refer them over to my personal secretary, Helen Waite.

    If they have a complaint, go to Helen Waite.

    No seriously, I've learned if it is best to handle a complaint is within the first 24hrs. Most you'll find are covered on your report, but the client either did not fully read the report or they claim they didn't think it was important. I always explain I'm sorry they might be experiencing a problem and being out of some money for a repair but I did my job and leave it at that. Welcome to Home Ownership 101.

    rick

    All clients should be reminded of this and I do remind every client of every inspection I do of this


  33. #33
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    Default Re: Have you been sued for E&O?

    Quote Originally Posted by Ted Menelly View Post
    All clients should be reminded of this and I do remind every client of every inspection I do of this
    I tell people "Welcome to the American dream. 30 years of work and debt".


  34. #34
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    Default Re: Have you been sued for E&O?

    Randy- if you refund anything or fix anything, ect., I would get them to sign something saying that that's the end of the issue: they can't come after you again. Make sure the agreement is drafted or at least reviewed by a local attorney so it stands up. I'm sure you do this already.

    Thanks.


  35. #35
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    Default Re: Have you been sued for E&O?

    I about to start in the home inspection industry and since I am in TX I have to carry E&O. I wasn't planning on getting GL. Can someone explain the difference?


  36. #36
    Ted Menelly's Avatar
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    Default Re: Have you been sued for E&O?

    Quote Originally Posted by TcDuhon View Post
    I about to start in the home inspection industry and since I am in TX I have to carry E&O. I wasn't planning on getting GL. Can someone explain the difference?
    Error an Omission

    Protects against something you may miss in an inspection.

    GL

    Protects you when you ladder slides sideways and lands on the home owners classic 57 Chevy or when you fall thru a ceiling or break a 5000 vase on the living room mantel


  37. #37
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    Default Re: Have you been sued for E&O?

    Yep already do that.


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    Default Re: Have you been sued for E&O?

    Quote Originally Posted by TcDuhon View Post
    I about to start in the home inspection industry and since I am in TX I have to carry E&O. I wasn't planning on getting GL. Can someone explain the difference?
    GL is cheap in comparison to E&O. You need both, in my opinion. E&O just because the state requires it and GL just in case you flood the house while checking the upstairs shower pan.

    Jim Luttrall
    www.MrInspector.net
    Plano, Texas

  39. #39
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    Default Re: Have you been sued for E&O?

    Quote Originally Posted by Jim Luttrall View Post
    GL just in case you flood the house while checking the upstairs shower pan.
    Funny you use that analogy.... I asked an E/O carrier once this exact question and he said since the accident occured while performing my duties it would be covered by E/O. I didn't think that was correct and havn't had to find out.... yet. He basically said that it's not an "accident" but an error in my job. An accident would be dropping the ladder on a car as someone described.


  40. #40
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    Default Re: Have you been sued for E&O?

    David,

    Can you provide a few examples (loss/claim) of what inspectors were sued for and the outcome whether it was settled post discovery or whether the matter was heard before a court?


  41. #41
    Mark T. Denton's Avatar
    Mark T. Denton Guest

    Default Re: Have you been sued for E&O?

    E&O is required in Texas. GL is CYA insurance. The guy in Canada who got sued probably deserved it. From what I saw he was in over his head and got nialed. You can always tell the client, "Let me check into it and get back to you", if you want to walk away clean. We are visual inspectors only and not responsible for hidden or latent defects and destructive testing is not required. An Inspection Agreement will protect you from the frivolous but in todays liars economy anything is possible. If you can't accept the risk you are probably in the wrong business.


  42. #42
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    Default Re: Have you been sued for E&O?

    Well said John G.

    As far as complaints go, I may get a few a year. I make it a point to address them as soon as possible, if not the same day, then the next. I have a release form printed out and a check already written for the inspection fee, just in case.
    Before I call them back, I bring their report up and briefly go over it, to try to refresh my memory.
    When I call them I listen to their story, and if it is something that is obviously in the report, I point it out to them while we are on the phone. This is sometimes the end of it.
    If not, I print out the report, and make an appointment to come out to the house.
    When I go out to the house, I try to keep my mouth shut, and always smile. I don't argue with them, or make excuses, I just listen.
    If it is something that I missed, then I tell them that according to our contract, they get their money back, and I'm ready to do that right now. They just have to sign a release.
    If they want more, or they are not happy, or they ask about my insurance, I tell them that while I do have insurance, it really does not kick in until they sue me. Most of the time, they are not really ready to go to court for more money.

    I have had a few where I gave them their money back, even though I felt I was right, because I had no doubt they would sue me.

    The main thing I have found with conflict resolution was smile and not talk. Most of the time, they end up talking themselves out of the issue. If you don't argue with them, it kind of takes the wind out of their sails. If you smile, it doesn't look like you are mad at them, or scared, or their enemy.

    T Wade Elrod (bless his soul) taught me that almost 20 years ago at a home inspection class. It was very good advice.


  43. #43
    Join Date
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    Default Re: Have you been sued for E&O?

    Quote Originally Posted by Jack Feldmann View Post
    Well said John G.

    As far as complaints go, I may get a few a year. I make it a point to address them as soon as possible, if not the same day, then the next. I have a release form printed out and a check already written for the inspection fee, just in case.
    Before I call them back, I bring their report up and briefly go over it, to try to refresh my memory.
    When I call them I listen to their story, and if it is something that is obviously in the report, I point it out to them while we are on the phone. This is sometimes the end of it.
    If not, I print out the report, and make an appointment to come out to the house.
    When I go out to the house, I try to keep my mouth shut, and always smile. I don't argue with them, or make excuses, I just listen.
    If it is something that I missed, then I tell them that according to our contract, they get their money back, and I'm ready to do that right now. They just have to sign a release.
    If they want more, or they are not happy, or they ask about my insurance, I tell them that while I do have insurance, it really does not kick in until they sue me. Most of the time, they are not really ready to go to court for more money.

    I have had a few where I gave them their money back, even though I felt I was right, because I had no doubt they would sue me.

    The main thing I have found with conflict resolution was smile and not talk. Most of the time, they end up talking themselves out of the issue. If you don't argue with them, it kind of takes the wind out of their sails. If you smile, it doesn't look like you are mad at them, or scared, or their enemy.

    T Wade Elrod (bless his soul) taught me that almost 20 years ago at a home inspection class. It was very good advice.
    what does you release say , basically?


  44. #44
    Join Date
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    Default Re: Have you been sued for E&O?

    It says that they are accepting a said amount, per our contract, and they won't come back and sue me for something in the future.


  45. #45
    Join Date
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    Default Re: Have you been sued for E&O?

    Great thread

    I got a call from a customers whose house I inspected 3.5 months ago. Called to complain about a broken window latch and a musty smell in a half bath.

    How would you all approach this customers complaint?


    //Rick

    Rick Bunzel
    WWW.PacCrestInspections.com
    360-588-6956

  46. #46
    Join Date
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    Default Re: Have you been sued for E&O?

    Firstly notify your insurer as per the advice given above by David Brauner.


  47. #47

    Default Re: Have you been sued for E&O?

    I would go & check it out, most likely fix the latch even if I didn't miss it, see if there is anything to the musty smell & go from there.

    Clarksville Home Inspection
    JW Goad
    TN License #307 | KY License #2402

  48. #48
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    Default Re: Have you been sued for E&O?

    After 3.5 months they are calling about a broken window latch? Seriously???

    Musty smell? Are they just asking you to come look at something, or are they saying you messed up?
    I wouldn't bother with the insurance company with this call.

    If they are complaining about a broken window latch after 3.5 months, they may be calling you every time something breaks, like its your fault. Hopefully you made it clear during the inspection that you just "might" miss small stuff, that you were there to find the BIG STUFF. Also that a home inspection is NOT a guarantee, or warranty.


  49. #49
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    Default Re: Have you been sued for E&O?

    "I got a call from a customers whose house I inspected 3.5 months ago. Called to complain about a broken window latch and a musty smell in a half bath.
    How would you all approach this customers complaint? "


    First of all, DO NOT go into defense mode.
    Be concerned, but not apologetic.
    Tell them,
    "I understand your concern.
    When can I come out to find why you have a Musky smell?"
    (If you can, go right then, do not put this off.)

    Then say,
    " So that I can be prepaired when I come out, do you have any other concerns you would like for me to look at while I'm there?"

    When you get there, do your inspection.
    Find out why there is a musky smell
    Document and photograph the good and the bad.

    Now there are several different things you can do depending on what you/ they want.

    ' correct a wise man and you gain a friend... correct a fool and he'll bloody your nose'.

  50. #50

    Default Re: Have you been sued for E&O?

    Quote Originally Posted by Rick Cantrell View Post
    [I]
    "I understand your concern.
    When can I come out to find why you have a Musky smell?"
    (If you can, go right then, do not put this off.)

    Then say,
    " So that I can be prepaired when I come out, do you have any other concerns you would like for me to look at while I'm there?"
    What makes you so sure someone can "find out why you have a Musky smell"?

    Then you forgot to suggest, "My fee for a one item inspection is, " Three and a half months is much too long to consider doing a freebee.


  51. #51
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    Default Re: Have you been sued for E&O?

    Hi John

    You ask:
    What makes you so sure someone can "find out why you have a Musky smell"?”
    By going out, I may be able to determine the cause, but it is certain that I will not find anything just by talking on the phone. And it is 100% certain that they can and will, find someone that will say, “Your Inspector should have seen this.”.

    " Three and a half months is much too long to consider doing a freebee."
    Too long for whom, you, the person calling you, or their attorney.
    A little well spent time now, is likely to save you hundreds of hours of lost sleep, worry, and time with an attorney (yours and theirs).

    Then you forgot to suggest, "My fee for a one item inspection is,”
    I really do not like to use the “N” word, but “NEVER, say that!
    The first thing I suggested was:
    “First of all, DO NOT go into defense mode.”
    This is VERY important.
    Since 98% of people on this board are 1-man operations, you are “Customer Service”.
    Now is the time to be Customer Service, not the person that performed the service.
    When someone “Receives the Call”, it is natural to want to explain to the calling party just how you are not responsible. As convincing as you are, when you hang up, they still have a problem, and they think you should do something about it. The question then becomes, “Who will they call now?”.
    You did read in an earlier post that people are less likely to sue a friend. In their eyes, are you being their friend, or are you trying to get outta something? By going out you show them that you think they are important, and you are concerned about them.
    Latter, depending on the findings, you may decide to send them a bill for the service, but not now.
    For now, what you want to do is get out there, listen to them, and find out what is the cause of their concern.
    Two things can happen:
    You do not find the cause, or
    You do find the cause;
    their concern was reported to them previously or
    their concern was not/ is not a part of the inspection
    their concern was caused since the inspection
    you missed something, or did not report it completely.
    If this is it, deal with it. This is the business you are in.
    This topic is for another discussion.

    Last edited by Rick Cantrell; 03-15-2010 at 05:01 PM. Reason: spelling
    ' correct a wise man and you gain a friend... correct a fool and he'll bloody your nose'.

  52. #52
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    Default Re: Have you been sued for E&O?

    Quote Originally Posted by Rick Bunzel View Post
    Great thread

    I got a call from a customers whose house I inspected 3.5 months ago. Called to complain about a broken window latch and a musty smell in a half bath.

    How would you all approach this customers complaint?


    //Rick
    Depends on the house, for me. If it was an older unit with plenty of issues, no, I will talk about possible solutions for them, but remind them politely what I told them on the day of the inspection.
    A newer house with minimal issues, now there's a smell, I have gone back. No. I didn't miss anything, but they think there's an issue. (mold ???) No charge for my 20 minutes, but they will refer more work my way, that's just good business practice.
    Broken handle, no, must have been done after the inspection. "I don't miss things like that." Musty bathroom, OK, I can give verbal advice on that, no return trip needed.
    Sometimes the clients don't get possession for 2 months or longer, after the inspection, so 3 or 4 mos isn't unreasonable.

    One place, I went back 5 months after the inspection, new condo, top floor, they had a bad smell, think it's mold, leaks, etc. I walked in and smelled sewer gas. No apparent moisture issues. The smell was stronger at the entryway. There was a shutoff valve behind a cover plate in the hall closet. At the inspection I had called it out for repair, the handle would not operate because it hit against the trim. The builder had simply knocked the piece of trim off and put the cover back on. The stink seemed to be leaking up from the basement through the wall cavity. I sent them an email to deliver to the builder, no charge, not their fault.
    I know I've received referrals from former clients for giving a bit of time here and there.

    John Kogel, RHI, BC HI Lic #47455
    www.allsafehome.ca

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