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  1. #1
    John Remark's Avatar
    John Remark Guest

    Default A claim is a claim is a claim!!!!

    Ok Guys, John Remark from First Indemnity here, and it is time for one of my rants... again.

    In the last 2 days, I have had two experienced inspectors inform me that they did not report an incident to the carrier or reveal that they are having a problem with a client because they did not consider them a "claim". They thought this because they did not believe that there was any culpability on their part and that they would/could handle the matter on their own.

    In one case, it was with a new client that had never had insurance before. So his mistake is understandable (even though he did sign a "No Known Claims" warranty letter). The other is with an inspector who has been a client of mine for a couple of years. He thought that if he used his own lawyer, and since the matter was so small, it should not be a problem.

    In both instances, the situation has grown beyond their control and the costs are now going to reach into the not small amounts.

    The definition of "Claim" varies from carrier to carrier.

    The definition of claim in the Torus Policy is:

    Claim
    means a written demand or written request for money damages.

    This is any (and not limited to) e-mail, letter, summons or fax where a client says-- I want you to pay for something.

    Lexington/AIG:
    Claim(s) means a written demand for money that is based upon an actual or alleged Wrongful Act of an Insured.

    Western Heritage: Claim(s) means an oral or written notice from any party that it is their intention to hold "you" responsible for any "wrongful act" Claim(s) also means your knowledge of circumstances which could reasonably be expected to give rise to such notice. "You" must tell us of such "claims" or circumstances in writing during the policy "policy period" or Extended reporting period, if applicable. Notice includes, but is not limited to, service of suit, institution of arbitration proceedings, mediation or any other Alternate dispute resolutions.

    For the record, I tell my insureds to operate under what the western heritage policy says. Report everything as it happens. You can still handle it on your own (with the help, knowledge and support of the claims handler).

    I know that when a client reports a "claim" to me, and nothing happens with the claim (from the carriers perspective no $$ is paid out or spent) it does not affect their pricing for the following year.
    This may not be the case for all carriers, but it is the case for mine.

    There are "Returns" in every business. You cannot keep/make everyone happy so I expect about one "return claim" per couple hundred inspections. Properly handled, most of these end up as $0 on the loss runs, and and in my opinion should not affect the pricing of the Home Inspector the following year.

    I would recommend that all of you read the definitions within your policy. Make sure you understand what it means and what your responsibilities are. If you have any questions, talk to your broker. If you want an outside opinion, send the policy to me (john@homeinspectorliability.com) or I am sure that Ben at FREA would be happy to help.

    If the "Return Claim" problem does not go away, you have reserved your rights under the policy to be defended and indemnified.
    We know the insurance carriers are going to reserve their rights, make sure you reserve yours!





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  2. #2
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    Default Re: A claim is a claim is a claim!!!!

    John,

    Thanks for the information.

    One request for clarification: I will occasionally get a phone call or email with a question or request to look at something that was not in the report. Not a request for compensation, but a request for information.

    These are typically regarding items or conditions that have been specifically disclaimed (in walls or other inaccessible areas). However, I suppose something like this could end up as a claim.

    My problem is the "grey area". Is this something that should be reported as a "claim"?

    Thanks

    Department of Redundancy Department
    http://www.FullCircleInspect.com/

  3. #3
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    Default Re: A claim is a claim is a claim!!!!

    Quote Originally Posted by John Remark View Post

    Claim
    means a written demand or written request for money damages.
    Apparently not Gunnar, only if they ask for money. Nice to have this in writing!


  4. #4
    John Remark's Avatar
    John Remark Guest

    Default Re: A claim is a claim is a claim!!!!

    Gunnar,

    Thanks for the response and the great question.

    It all depends on the definition of "claim". With my carrier, it is a written demand more money/compensation.

    When to notify the carrier depends much on the tone and tenor of the discussion.

    example 1- Client sends a politely worded e-mail asking for clarification on certain aspects of a report. This should not be a problem. Clarify and explain the aspects of the report that are in question. Make sure you bring the pre-inspection agreement to the meeting as well as any other pictures you may have pertaining to the suspect areas.

    example 2- Client sends an email stating that they brought in a contractor to do some work and the contractor said that you should have found something that is now going to cost them some money. This one could be a problem. They now have an "expert" that backs up their own prejudices. In many instances you can show a client that the contractor is wrong. Make sure you bring the SOP, Pre-inspection agreement and the report with you. It is also wise to have any other pictures you may have of the suspect area in case there are other questions.

    example 3- Client calls and says that the town inspector has come in and says that some of the house is not to "code". This one may/may not be a problem. Depending on their response to you showing the pre-inspection agreement showing them that you do not inspect to code, and that they agreed to it and that code is not part SOP for your association/State requirements. Normally this takes care of the problem.

    example 4 client calls up and says that they have water damage in the basement. They are wondering how this could have happened. Depending upon how many pictures you have take, how detailed the report, and the type of damage, you may be able to show the client you are not responsible (assuming you are not) and make the problem go away.

    Even though, none of the examples have the client asking for money and there are no lawyers involved (yet) all have a potential for a claim. Only on the first one would I not notify the carrier immediately. All the rest of the examples have a significant capacity to lead to a payable claim and should be reported right away.

    I hope this helps. Feel free to give me a call/e-mail with any questions.

    John Remark
    First Indemnity Insurance
    john@homeinspectorliability.com


  5. #5
    John Remark's Avatar
    John Remark Guest

    Default Re: A claim is a claim is a claim!!!!

    Ben,

    All the expectations of the carrier are in writing, they are in the policy. Depending upon the policy you will/should report earlier in the process.

    With the Torus and the Lex policy, you are correct. You probably do not have to report the "gray" areas. But if after the conversation, the clients appear to be unsatisfied, under the western heritage policy you would have to report the claim. Each policy is written different.

    Regardless, your broker should be able to help you in these situations and advise you. If he cannot, get a different broker who is more knowledgeable :-) Additionally, using the carrier and their resources can mitigate and lower your costs.

    Thanks for the response and have a great day!

    John Remark
    First Indemnity Insurance
    john@homeinspectorliability.com


  6. #6
    Ted Menelly's Avatar
    Ted Menelly Guest

    Default Re: A claim is a claim is a claim!!!!

    Thanks for all the info

    I must say that the biggest thing that grabbed me was the comical comment below

    "Properly handled, most of these end up as $0 on the loss runs, and and in my opinion should not affect the pricing of the Home Inspector the following year. "

    I have always gotten a kick out of that. Some folks will have car insurance sometimes for decades from the same company. They get into an accident and they are now a risk and their insurance goe up for the next several years.

    Thge funnier part is the portion of that that says

    "Properly handled, most of these end up as $0 on the loss runs"

    Take care of foolishness yourself and they will always be a $0 on the loss runs.

    Seeing how insurance companies are the riches corps out there as in the heads make fortunes I think the entire insurance industry needs to reorganize. The insurance companies are like Casinos. They do not build multi million dollar or billion dollar Casinos because they take a loss. It is a win win situation for the insurance companies. We just get to pay more every year so they can continue to make more every year. Every time there is a disaster and they pay out fortunes.......they still make a huge profit and everyone including the multi million dollar execs still get paid.

    I wonder who is taking advantage of who. Fact is the Home inspection screw up or even if not a screw up and they pay themselves to make someone go away is minuscule in comparison to the amount of home inspections performed by the thousands of inspectors out there. Hmm. How many homes are sold and how many of those are inspected every year. What is the minimum deductible and if something does get paid out at all how many of those pay outs are from the inspectors deductible. How many cases are settled before the deductible is used up from the home inspector and because he had a claim that money got paid out his insurance went up the following year.

    Rant rant rant. Just a fact. Insurance companies are not in business to make nothing (Casinos) and no matter how much they pay out every year they still make fortunes.



  7. #7
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    Default Re: A claim is a claim is a claim!!!!

    John,

    That was a great example. Thanks.

    Department of Redundancy Department
    http://www.FullCircleInspect.com/

  8. #8
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    Default Re: A claim is a claim is a claim!!!!

    'Gray' areas have different meanings to different people.

    Let's have another example. Here in NJ, it's written in the licensing law that 'MOLD' is excluded from the home inspection.

    Now, suppose your client discovers mold after they move in and believe you should have told them. Now some slime company says it's going to cost $10,000 to have remediation.

    You know it's not part of the SOP, they say I'm suing you for $15,000 (the added extra 5,000 is so they can take a well needed vacation while the remediation is on-going).

    Are you to to put in a claim?

    Darren www.aboutthehouseinspections.com
    'Whizzing & pasting & pooting through the day (Ronnie helping Kenny helping burn his poots away!) (FZ)

  9. #9
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    Default Re: A claim is a claim is a claim!!!!

    Or ... how about insurers paying out claims simply based on economics, not based on defensibility, then turn around and make the inspector out to be the bad guy?

    We have all heard about these instances, and we all likely know of inspectors who have had their insurers bend over and pay out without so much as a wimper.

    I also have a problem with inspectors who continually advertise their insurance and openly imply that insurance is for protection of their client. Not. The insurance is for protection of the policy holder.

    It certainly appears that insurance is seen as a warranty program.

    I don't see architects and P.Eng advertising their insurance coverage.


  10. #10
    John Remark's Avatar
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    Default Re: A claim is a claim is a claim!!!!

    I guess a couple of you are pretty jaded.

    Yes, insurance companies make money. It is America and that is why we work, to make money. I know that is why I work so hard.

    The point I am trying to make is that by not reporting these "foolish" claims, they have now endangered their coverage and their business. We are here to help you handle these problems and by not using the insurance carriers, you are doing yourself a disservice and ultimately costing you more money.

    I see claims everyday. People make mistakes. People are sued for no reason. That is what we are here for, to help you defend yourself. I have had a number of cases where we have defended and won. We have a number of cases where we settled. We have a number of cases where we assisted the HI to make the problem go away without involving lawyers. We have a number of cases where the HI screwed the pooch and we are strictly trying to limit damages.

    I have seen on this blog and others, it is not a matter of if, but when you will be sued for conducting a home inspection. You can either go it alone, or with help. We are here to help you according the contract and agreement that was agreed to. No more no less. By not reporting the claim in a timely manner, you endanger your coverage you have been paying for, thus defeating the purpose of purchasing the insurance.

    In regards to the mold/out of SOP claim. As soon as they ask for money or say that you are responsible for something (regardless of whether it is in the SOP or not), report it to the carrier. Period.

    In regards to settling: the lower the cost to the carrier, the lower the price increase (if any) for the following year. If you want us to defend everything to the fare the well, defense costs would/will spiral out of control as compared to the cost of settling and making the problem go away. We are in the business to make money and make sure you and your business are protected at a reasonable cost. The lower the cost of the suit, the better it is for everybody.

    I know that many of you believe that insurance is a racket. I think that paying $1200/year to protect my 2001 Suburu Forester is crazy amount of money for a $4000 car. But the insurance is not for the car, but for the people around me. I have not had an at fault accident in 15 years and not had a big accident since I was 18 (I am 42). But I still pay it. The carriers make money and I am happy to pay it. I never know when someone is going to create a situation that regardless of how careful I am, will make me pay.

    Insurance is not a legal defense fund, but a way for you and the rest of the home inspectors in the pool to share/manage risk if/when things go wrong. You may not think it will happen to you, but your next accident could be right around the corner. How risk averse are you feeling with your job, your family and your future? The last 3 claims I have had reported to my company have been 7 year+ veterans that :had never had a claim before". They are stunned when one day they sheriff walks to the door with court papers.

    It does not always happen to the other guy.

    BTW-- According to my calculations, the likelihood of a home inspector getting a claim is about .0006% . Pretty small number. What this means is that there is a payable claim once every 1500 hundred inspections or so. So basically once every 7 years or so, you will have a claim.

    There were 5,000,000 home transactions last year. That means there were about 3,000 "claims:" last year against home inspectors. The vast majority if these are small claims, but many of them are medium (greater than $10K) and some are extremely large (greater than $100K). We do not know. So we cost average and share the risk across the group. Just like any other insurance pool. But paying for $500,000 in coverage for $2200/year or so is not a bad deal.

    I know I will never convince many of you. The purpose of me starting this thread was to help you protect yourself better and make sure you do not inadvertently lose your rights under your contract. I am not selling anything, I am merely trying to help.

    Regards,

    John Remark
    First Indemnity Insurance
    john@homeinspectorliability.com


  11. #11
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    Default Re: A claim is a claim is a claim!!!!

    ..... you want us to defend everything to the fare the well, defense costs would/will spiral out of control as compared to the cost of settling and making the problem go away. We are in the business to make money and make sure you and your business are protected at a reasonable cost. The lower the cost of the suit, the better it is for everybody.
    Yes everyone but the inspector who is labeled as high risk, higher premiums, pays the deductible, and then either can't get insurance or bites the bullet even though he may not be negligent in tort or in contract. All in the name of the bottom line.

    Yes call me jaded.


  12. #12
    John Remark's Avatar
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    Default Re: A claim is a claim is a claim!!!!

    Ray,

    I have never heard of a HI not being able to get coverage. The coverage might be expensive, but they can get coverage.

    For small claims, I have not heard of many instances where a HI cannot handle the price increase. It is not generally a doubling or tripling of the rate, but a smaller % of what they were paying last year. If the claim is a large one, thank god the HI has the insurance otherwise they would never have been able to pay for the lawyers. He should be happy to pay the increase because the value they received was multiples as compared to what they paid.

    And yes-- the bottom line is important.I will not apologize about that. It is important for your business and it is important to mine. Just because the carrier is a large company does not make them immune to the need to make a profit.I am stunned when people complain about companies making a profit. It is why I work. Why is making a profit a problem?

    Regardless, you paid for a service and we do perform for you. And out of all the customers I have had with a claim: they are all in business. They are here and working. Their reputations have not been damaged beyond repair. And most (if not all, I will have to research this) are still insured with my company.


  13. #13
    Ted Menelly's Avatar
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    Default Re: A claim is a claim is a claim!!!!

    The scare

    It is not a matter of if but when you will be sued.

    Highly unlikely.

    Countless and I mean countless have gone thru life as an inspector and never been sued and rolled into retirement. Most, not some. I have known countless over the years that this is the case. I follow who gets sued and when. I do know a handful that have paid a small pittance to make folks go away but their insurance would not have paid anything anyway because it was far under the deductable. Most case only a small portion of the deductible.

    I do not down anyone for making a profit but to increase anyone's insurance for a small pay out after they have paid for years and in most case more than what the payout was is a crime.

    For insurance companies to pay out billions from disasters and still pull a profit at the end of the year just has to tell you something. The lower man on the totem should be getting paid more for his or her hard work bringing the insured into the company.

    Anyways. I could name a serious amount of names of folks that would not have E+O if it were not the law that they had to.

    I paid Allstate for decades and never had a claim and then one year I was in an accident. No fault state, my rates went up and stayed there for the next three years. In case you are wondering it was not my fault. Now they have accident forgiveness.


  14. #14

    Default Re: A claim is a claim is a claim!!!!

    The claims for inspectors are getting ridiculous. Common sense would suggest that a down market would result in lesser claims because of less transactions but I don't really see that being the case. Years ago, home buyers probably didn't care as much about small defects in a home because maybe they thought any quick equity they got would be able to subsidize repairs, renovations, etc., etc? Now.... well.... not so much. Oh, and by the way...those small defects I mentioned? Clearly the fault of the home inspector because you can see through walls, predict the future, and are a specialist in every aspect of the home (enter sarcasm font).

    I get call after call after call all day from inspectors who have either claim or potential claim. Today, for example, an inspector in New York called me because he did an inspection a few months ago and there were signs of water penetration in the INACCESSIBLE attic after the buyer cleaned out the gutters. Not only did he mention the gutters were an issue in his report, but the buyer went ahead and had a contractor fix the issue without giving the inspector a chance to reinpsect the property. As we all know, that is a violation of the agreement signed by the home buyer.

    Because that inspector had been contacted in a non-threatening way by the buyer of the house, not an attorney, I told him to draft a response letter citing the portion of his PIA about being given the chance for resinspection as well as where he noted the issue in the report itself and send it to me for review. Hopefully that will put it to rest but I'm not so sure it will. If that is not good enough, I recommend that the inspector offer the inspection fee back and if THAT is not good enough, perhaps offer an amount equivalent to the deductible. I know, I know... you did nothing wrong, why should you have to pay? Quite frankly, I don't care if they choose to settle on their own or involve the insurance company.

    I see instances where the home buyer says, "I don't give a fack what I signed, you screwed up...." And the next letter will be from an attorney. It's completely bogus and borderline extortion if you ask me. But you pay us money and we assume the risk in exchange for that.

    When in doubt, call the insurance company. If someone calls our claims manager in NYC, that doesn't trigger the deductible. They will do an analysis of the claim, the report, agreement, etc., etc. Not only that, we will write a declination of liability letter to a plaintiff on behalf of our insured that STILL won't trigger the deductible.

    Moving on... there are people who are very adament about not carrying insurance and think they don't need it. Great. Don't buy it. The only thing possible to make them change their mind is having a claim filed against them having to foot the bill on their own. Then there are those who wouldn't operate without it. Great. I'm happy to sell it to you and provide you with a comprehensive policy with excellent service as well.

    All I ask is that that you read the policy and ask any questions you might have. You expect your clients to read the agreement you have with them, we, the insurance industry, have the same expecation of you.


  15. #15
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    Default Re: A claim is a claim is a claim!!!!

    If 60 inspectors put $3000 each in a kitty, they would have $180,000 to hire a lawyer or put towards a claim.
    In 3 years, they would have $540,000 in the insurance fund, enough to buy the house back if there's a claim.

    It's a pyramid scam, must be.

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

  16. #16
    Ted Menelly's Avatar
    Ted Menelly Guest

    Default Re: A claim is a claim is a claim!!!!

    Quote Originally Posted by John Kogel View Post
    If 60 inspectors put $3000 each in a kitty, they would have $180,000 to hire a lawyer or put towards a claim.
    In 3 years, they would have $540,000 in the insurance fund, enough to buy the house back if there's a claim.

    It's a pyramid scam, must be.
    That is one way to look at it. Out of those 60 inspectors how many will get sued for something real and how big would the suit be for. I would venture to say few to none would be sued for anything real and the pay out would be a small pittance of that 540,000


  17. #17
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    Default Re: A claim is a claim is a claim!!!!

    E&O insurance is just the cost to do business. If you didn't have insurance, would you reduce your fees?

    Here's a question for the insurance companies. Is there a number for how many inspectors have 'repeat' claims.
    Just my opinion but I'm thinking a poor inspector, or a 'realtor' kisser would have multiply claims while others may not have any.
    For some reason I would also think multi inspector firms are more prone to suits (I'm not basing multi-inspector firms, I'm just thinking out loud that it's hard to keep a constant reporting method with differnet inspectors).

    Do the insurance companies keep records of these situations?

    Darren www.aboutthehouseinspections.com
    'Whizzing & pasting & pooting through the day (Ronnie helping Kenny helping burn his poots away!) (FZ)

  18. #18
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    Default Re: A claim is a claim is a claim!!!!

    The problem is some disgruntled client feels harmed by inspection, even though there is no merit. They may want a minimal amount, say $10K. What do you think the insurers are going to do if the claimant is persistent?

    Try and get the particulars from the insurers, they hold that info close to their chests.


  19. #19
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    Default Re: A claim is a claim is a claim!!!!

    Quote Originally Posted by Ted Menelly View Post
    That is one way to look at it. Out of those 60 inspectors how many will get sued for something real and how big would the suit be for. I would venture to say few to none would be sued for anything real and the pay out would be a small pittance of that 540,000
    So, what do we call our insurance fund?

    I'll be happy to hold the money .

    (send all request for pay out to P.O. in Bahamas)

    The beatings will continue until morale has improved. mgt.

  20. #20
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    Default Re: A claim is a claim is a claim!!!!

    Some interesting findings. Self explanatory.

    Home Inspector E & O – Across Canada
    203 People Surveyed.
    1. First Name and last name – Deleted

    2. In what area do you practice?
    • Nova Scotia - 2%
    • New Brunswick - 4%
    • Newfoundland - 1%
    • Prince Edward Island - 0%
    • Quebec - 1%
    • Ontario - 60%
    • Manitoba - 3%
    • Saskatchewan - 1%
    • Alberta - 12%
    • British Columbia - 15%
    • Northern Canada - 0%
    • Other - 1%


    3. What home inspection association(s) are you a member of?
    • CAHPI – Alberta - 13%
    • CAHPI – Saskatchewan - 1%
    • CAHPI – Manitoba - 4%
    • CAHPI – Ontario - 55%
    • CAHPI – Quebec - 1%
    • CAHPI – Atlantic - 5%
    • ASHI - 8%
    • BCIPI - 4%
    • NACHI - 17%
    • OTHER - 6%


    4. How long have you been an inspector?
    • Less then one year - 10%
    • One to two years - 15%
    • Two to four years - 19%
    • Five to seven years - 18%
    • Eight to ten years - 10%
    • Eleven to fifteen - 16%
    • More then fifteen - 12%


    5. What if any Home Inspection designation do you have?
    • Registered Home Inspector - 52%
    • Associate - 19%
    • Candidate - 3%
    • Student - 2%
    • CHI – BCIPI - 1%
    • Certified by some other organization - 8%
    • Other - 12%
    • Abstain - 3%

    6. Do you carry Errors and Omissions Insurance?
    • Yes - 62%
    • No - 36%
    • Abstain - 2%


    7. Do you belong to a 'Membership Protection Fund' or self-assurance plan?
    • Yes - 11%
    • No - 87%
    • Abstain - 2%

    8. If you answered yes to # 6 or # 7, why do you have it? (choose all options that apply to you)
    • To protect my assets - 49%
    • To protect my customers - 16%
    • To create a competitive advantage - 11%
    • I don’t have an option (it is a franchise/provincial association condition for doing
    business) - 27%
    • Other - 10%


    9. What is the main source of risk you are facing? (choose all that apply)
    • I'm new at home inspections and feel inexperienced - 12%
    • I'm a high volume inspector - 18%
    • My client's expectations are unrealistic - 33%
    • I do not think that my contract will protect me in court. - 29%
    • Lawyers walk among us. - 51%
    • Not applicable - 8%
    • Other - 14%


    10. Do you wish that E & O was made mandatory for all inspectors?
    • Yes - 46%
    • No - 52%
    • Abstain - 2%


    11. Have you ever filed a claim?
    • Yes - 25%
    • No - 73%
    • Abstain - 2%


    12. In your opinion, did the insurer and lawyers fight hard enough for you?
    • Yes - 26% (% of those who answered yes in the previous question)
    • No - 74% (% of those who answered yes in the previous question)


    13. If you have E & O, what annual premium do you pay?
    • Less than $ 1,000 - 1%
    • $ 1,000 to $ 2,000 - 2%
    • $ 2,000 to $ 3,000 - 2%
    • $ 3,000 to $ 4,000 - 11%
    • $ 4,000 to $ 5,000 - 34%
    • More than $ 5,000 - 13%
    • More than $ 10,000 - 3%
    • Not applicable - 22%
    • Abstain - 12%


    14. Are you presently covered by an insurance policy that includes more than one
    inspector in a company?
    • Yes - 14%
    • No - 83%
    • Abstain - 3%


    15. Do you advertise E & O (if you have it)?
    • Yes - 8%
    • No - 83%
    • Abstain - 9%


    16. Why? Why not?

    Comment Question
    17. Do you believe that a home inspection company that carries E & O has a competitive advantage over a company that does not carry it?
    • Yes - 49%
    • No - 49%
    • Abstain - 2%


    18. Why? Why not?
    Comment Question

    19. Do you believe that a home inspection company has the RIGHT to make consumers aware that they carry E & O?
    • Yes - 65%
    • No - 33%
    • Abstain - 2%


    20. Why? Why not?
    Comment Question

    21. Do you believe that a home inspection company has the DUTY to make consumers aware that they carry E & O?

    • Yes - 9%
    • No - 88%
    • Abstain - 3%

    22. Why? Why not?
    Comment Question

    23. Do you agree that having E & O is a sign of an inspector's competence? (Please respond regardless of whether you have E & O)

    • Yes - 23%
    • No - 75%
    • Abstain - 2%

    24. Why? Why not?
    Comment Question

    25. How often do your clients ask about your insurance status?

    • Never - 18%
    • Seldom - 69%
    • Frequently - 11%
    • All the time - 1%
    • Abstain - 1%

    26. Whom do you feel E & O protects? (Check all that apply)

    • Inspector - 71%
    • Client - 23%
    • Realtor - 15%
    • Association - 10%
    • All - 11%
    • None - 15%

    27. Do you feel it would be better if E & O became unavailable to inspectors?

    • Yes - 27%
    • No - 70%
    • Abstain - 3%

    28. If E & O became unavailable, would you continue in the Home Inspection business?

    • Yes - 73%
    • No - 24%
    • Abstain - 3%

    29. Do you feel that your association SHOULD have an official (and enforceable) policy banning advertising E & O?

    • Yes - 51%
    • No - 46%
    • Abstain - 3%

    30. Why? Why not?
    Comment Question

    31. Do you feel that your association COULD have an official (and enforceable) policy banning advertising E & O?

    • Yes - 49%
    • No - 46%
    • Abstain - 5%

    32. Do you feel that the introduction of such a policy would need the approval of your association's membership?

    • Yes - 84%
    • No - 13%
    • Abstain - 3%

    33. What sanctions/penalties would be appropriate if a member violated an association's E & O advertising policy?

    • Premium surcharge - 16%
    • Fine - 28%
    • Temporary suspension of designation/membership - 41%
    • None - 20%
    • Other - 19%

    34. Do you feel that those who advertise E & O should be paying a 'marketing surcharge' to the insurer for the right to do so?

    • Yes - 31%
    • No - 64%
    • Abstain - 5%

    35. Do you feel that those who are advertising E & O are increasing the risk/premiums of all the group members by inviting unnecessary risk?

    • Yes - 79%
    • No - 21%

    36. Would you advertise your E & O (assuming you have it) in the future if your association encouraged it?

    • Yes - 21%
    • No - 76%
    • Abstain - 3%

    37. Would you stop advertising your E & O (assuming you have it) in the future if your association discouraged/banned it?

    • Yes - 70%
    • No - 15%
    • Abstain - 15%

    38. Would you discontinue your association membership in the future if your association banned you from advertising your E & O?

    • Yes - 7%
    • No - 87%
    • Abstain - 6%

    39. Do you believe advertising E & O is a sound business practice?

    • Yes - 15%
    • No - 82%
    • Abstain - 3%

    40. Do you consider it okay to advertise E & O if you limit the mention of insurance to a secondary line in a web site or brochure rather than directly featuring it as a benefit to clients?

    • Yes - 24%
    • No - 70%
    • Abstain - 6%


    41. What would you consider to be an acceptable annual cost for E & O?
    • Less than $ 1,000 - 15%
    • $ 1,000 to $ 2,000 - 39%
    • $ 2,000 to $ 3,000 - 31%
    • $ 3,000 to $ 4,000 - 7%
    • $ 4,000 to $ 5,000 - 3%
    • More than $ 5,000 - 2.5%
    • Abstain - 2.5%

    42. How much should the minimum coverage be?

    • $ 100,000 - 8%
    • $ 250,000 - 15%
    • $ 500,000 - 27%
    • $ 1,000,000 - 43%
    • Other - 3%
    • Abstain - 4%

    43. How much should the deductible be?

    • $ 1,000 - 28%
    • $ 2,500 - 34%
    • $ 5,000 - 21%
    • $ 10,000 - 9%
    • $ 15,000 - 1%
    • Other - 3%
    • Abstain - 4%

    44. Have you had your rates increased or coverage reduced/suspended due to claims?

    • Yes - 9%
    • No - 80%
    • Abstain - 11%

    45. What are acceptable exclusions ? Choose all that apply?

    • Mould - 49%
    • UFFI - 45%
    • PDI’s (New unoccupied homes) - 14%
    • Partial Inspections - 32%
    • Teaching - 31%
    • Energy Audits - 40%
    • Multiple unit buildings - 11%
    • Commercial buildings - 18%
    • Other - 12%

    46. Would you buy E & O insurance next year if premiums cost you:

    • $ 5 per inspection - 34%
    • $ 10 per inspection - 45%
    • $ 20 per inspection - 22%
    • $ 30 per inspection - 4%
    • $ 40 per inspection - 0%
    • $ 50 per inspection - 2%

    47. If you do not carry E & O, would you be more willing to do so if it was based on a per inspection ratio, or more reasonably priced?

    • Yes - 42%
    • No - 6%
    • Not Applicable - 47%
    • Abstain - 5%

    48. Have you considered other ways to protect yourself from litigation?

    • Yes - 81%
    • No - 17%
    • Abstain - 2%

    49. What level of security do you feel your E & O gives you?

    • A lot - 14%
    • Some - 46%
    • Little to none - 17%
    • Less than none (it makes you a target) - 18%
    • Abstain - 5%

    50. Do you think that there should be any specific insurance policy sponsored or endorsed by either provincial Associations or CAHPI National?

    • Yes - 65%
    • No - 32%
    • Abstain - 3%

    51. Are you interested in a proposal to the Membership about self-insurance?

    • Yes - 76%
    • No - 21%
    • Abstain - 3%

    52. Do you think there should be a CAHPI Ombudsman to help with potential claims before they are reported to the insurer?

    • Yes - 84%
    • No - 14%
    • Abstain - 2%

    53. Do you think that E & O Insurance committees and chairs should be elected, or appointed?

    • Elected - 39%
    • Appointed - 12%
    • Combination - 45%
    • Abstain - 4%

    54. Do you think our associations should accumulate our own statistics about claims against us?

    • Yes - 90%
    • No - 7%
    • Abstain - 3%

    55. Would you be willing to share information about current or past claims with a
    committee of your peers?
    • Yes - 89%
    • No - 8%
    • Abstain - 3%

    56. Do you feel that we should make known what claims have been processed, won, and
    lost?
    • Yes - 81%
    • No - 17%
    • Abstain - 2%

    57. Would you attend a Risk Management seminar about claims, their causes, and
    possible methods of avoiding or mitigating them?
    • Yes - 95%
    • No - 3%
    • Abstain - 2%

    58. Should such a seminar be made mandatory?

    • Yes - 74%
    • No - 24%
    • Abstain - 2%

    59. Do you believe Canadian Home Inspectors should feel comfortable purchasing E & O from a US based company?

    • Yes - 48%
    • No - 48%
    • Abstain - 4%

    60. Do you have a problem purchasing E & O from an exclusionary Canadian company?

    • Yes - 31%
    • No - 60%
    • Abstain - 9%

    61. Please feel free to add any comments or concerns that you feel we should address and haven't with this questionnaire. Thank you.


    Comment Question

    Note: ‘Comment Question’ means that the respondents have commented further and the
    comments are in an attached document.


    This is an unofficial survey conducted privately by Bill Mullen, Sarnia, Ontario. It
    was not requested or sanctioned by ay organization or association. The
    information is not intended to be definitive since the number of respondents is not
    high enough to be representative. It is for interest only.

    Anyone is free to view or use the information as they see fit, provided they do not
    rely on the survey results.

    Thanks to all who responded and to those who helped distribute it. Please send
    questions or comments to Bill Mullen at bmullen@ebtech.net .


  21. #21

    Default Re: A claim is a claim is a claim!!!!

    Quote Originally Posted by Ted Menelly View Post
    That is one way to look at it. Out of those 60 inspectors how many will get sued for something real and how big would the suit be for. I would venture to say few to none would be sued for anything real and the pay out would be a small pittance of that 540,000
    You're seeming to forget that it's not just the payout/settlement/indemnity. Please take into consideration the defense costs that a claim also has attached to it.

    That pool of money you mention is a great idea and I encourage that you give that a shot. How would you feel if one inspector needed $400,000 of that pot that YOU contributed to for a claim of his own? I have one of those in New Jersey right now. Oh and by the way, that's not including the attorney fees. Guess what? The claim is b.s and our inspector was named as a co-defendant along with the seller and sellers agent. At the latest mediation meeting last week, the plaintiff went down to 375K. We counter offered 15K and I'll consider us lucky if we get out below 100K.

    Saw an inspector in CA get popped for his entire 1,000,000 policy limit. How would you like that to happen to you even if you WERE carrying insurance? Again, it's tough to justify the need for insurance until you actually NEED it. You can't see, touch, or feel insurance (except the policy that nobody reads) and the only time you know it's there is if you have a claim or when you get your bill. So of course there's a negative stigma attached to it.


  22. #22
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    Default Re: A claim is a claim is a claim!!!!

    Quote Originally Posted by John Kogel View Post
    If 60 inspectors put $3000 each in a kitty, they would have $180,000 to hire a lawyer or put towards a claim.
    In 3 years, they would have $540,000 in the insurance fund, enough to buy the house back if there's a claim.
    I posted this because it could be a reality for other home inspection associations. I am lucky to be a member of CAHPI(BC) with 150-200 members. With licensing, E&O is now mandatory in BC. CAHPI(BC) members have a choice for E&O, private companies or the association's own legal benefits plan.

    The annual cost for the LBP is now under $3000 and we expect it to go down because of an accumulating fund, with minimal claims paid out. We have a lawyer on retainer who specializes in home inspection law. We have 1/2 hour free consultation with our lawyer if an issue comes up. We would not deny coverage just because the member tried to handle the issue on his own, and then got slapped with a lawsuit. Like I said, we are lucky to have a strong association in this province.

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

  23. #23

    Default Re: A claim is a claim is a claim!!!!

    Quote Originally Posted by John Kogel View Post
    I posted this because it could be a reality for other home inspection associations. I am lucky to be a member of CAHPI(BC) with 150-200 members. With licensing, E&O is now mandatory in BC. CAHPI(BC) members have a choice for E&O, private companies or the association's own legal benefits plan.

    The annual cost for the LBP is now under $3000 and we expect it to go down because of an accumulating fund, with minimal claims paid out. We have a lawyer on retainer who specializes in home inspection law. We have 1/2 hour free consultation with our lawyer if an issue comes up. We would not deny coverage just because the member tried to handle the issue on his own, and then got slapped with a lawsuit. Like I said, we are lucky to have a strong association in this province.
    I have heard good things about that program as a matter of fact. My ONLY concern is if one of the inspectors gets popped with a big claim. Are you required to have any sort of reserves? At some point, as your number of insureds increases, so does the likelihood of increased claims. Just a matter of how big and when.


  24. #24
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    Default Re: A claim is a claim is a claim!!!!

    Quote Originally Posted by Ben Garrison View Post
    Saw an inspector in CA get popped for his entire 1,000,000 policy limit.
    Ben,

    Was the inspector negligent?
    Were the conditions noted in the report?
    Was the inspector cancelled?

    Department of Redundancy Department
    http://www.FullCircleInspect.com/

  25. #25

    Default Re: A claim is a claim is a claim!!!!

    Quote Originally Posted by Gunnar Alquist View Post
    Ben,

    Was the inspector negligent?
    Were the conditions noted in the report?
    Was the inspector cancelled?
    Whether the inspector was or was not negligent was not up to the insurance company to decide. Their job is to defend the insured and adhere to whatever decision a judge or jury renders.

    So, if the inspector WAS negligent in failing to disclose certain conditions resulting in catastrophic loss, then I think it's safe to say that carrying insurance was a wise move for all parties involved. If the inspector was NOT negligent in noting various defects in the house, I think it's safe to say that you are at risk regardless of how good of an inspector you are.


  26. #26
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    Default Re: A claim is a claim is a claim!!!!

    Great thread.

    My take on insurance is that even when it is not required it is smart.

    People bring lawsuits whether or not you do your job well and according to standards. I want the protection.

    I've heard people say you make yourself more of a target by carrying it but I'll take that chance versus keeping the equity in my own home.

    As for the profits the insurance carriers make - well, I do not hold it against them and we need them to be profitable and liquid so they can pay out large sums if necessary but that business is like having a license to print money.


  27. #27
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    Default Re: A claim is a claim is a claim!!!!

    Quote Originally Posted by Tom King View Post
    Great thread.

    My take on insurance is that even when it is not required it is smart.

    People bring lawsuits whether or not you do your job well and according to standards. I want the protection.

    I've heard people say you make yourself more of a target by carrying it but I'll take that chance versus keeping the equity in my own home.

    As for the profits the insurance carriers make - well, I do not hold it against them and we need them to be profitable and liquid so they can pay out large sums if necessary but that business is like having a license to print money.
    I do not have a choice to have E&O or not as the two states that I'm licensed in require it.

    I do a good amount of litigation support for law firms who are hired by the various E&O insurance companies and I will agree that it does not take long for the defense dollars to add up. Many times I'm hired just to tell the attorney if I think the inspector screwed up or not, this helps them to decide to settle quick or to proceed down the litigation road. I would say that about 80% of the time I end up telling the attorney that they might want to try and settle because the inspector did screw up.

    I also work the plaintiff side of the fence and I would estimate that 90% of the time with a lawsuit against a home inspector, that it will not proceed if that inspector does not have E&O. It will end shortly after the discovery phase, if not sooner. You can't get blood from a turnip as the old saying goes! About the only way it will proceed is if the plaintiff is paying that attorney out of their own pocket and not on a contingency based fee.

    I advise all home inspectors to have as high of a deductible as they can afford. IMVHO, $5K is a good amount for a deductible. I look at E&O like catastrophic health insurance. I do not plan on using it but I have a safety net if I need it.

    Scott Patterson, ACI
    Spring Hill, TN
    www.traceinspections.com

  28. #28
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    Default Re: A claim is a claim is a claim!!!!

    High Deductible = No Insurance
    There is good news and bad news regarding the home inspection industry and errors and omissions insurance. The bad news is that home inspectors get sued more frequently than most real estate professionals, the good news is that most claims are under $2,000. A recent survey revealed that the standard deductible for most home inspection policies is $2,500. Looking at the available statistics regarding claims for home inspectors, one item jumps out: the average claim is under $2,000. Your own experience should bear this out. In this light, isn't having a $2,500 deductible really like having no insurance at all? FREA's policies all come with a low $1,000 deductible.


  29. #29

    Default Re: A claim is a claim is a claim!!!!

    It's a roll of the dice. This is all legalized gambling when it comes down to it. And I say that about any line of insurance. I got slapped with with $30/month increase on my health insurance and I had one claim last year. Obvioulsy that increase sucks but then I'm thinking to myself, "Hmmmmm... one claim... should I just up my deductible and take an automatic savings in premium?"

    It could come back to bite me if I do that. With my luck, I'll wind up in a situation where I'll shell out that deductible difference. Now, knowing my luck, I opted to accept the increase.

    Insurance... can't live with it, can't support my girlfriend without it :-)


  30. #30
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    Default Re: A claim is a claim is a claim!!!!

    Quote Originally Posted by Raymond Wand View Post
    High Deductible = No Insurance
    There is good news and bad news regarding the home inspection industry and errors and omissions insurance. The bad news is that home inspectors get sued more frequently than most real estate professionals, the good news is that most claims are under $2,000. A recent survey revealed that the standard deductible for most home inspection policies is $2,500. Looking at the available statistics regarding claims for home inspectors, one item jumps out: the average claim is under $2,000. Your own experience should bear this out. In this light, isn't having a $2,500 deductible really like having no insurance at all? FREA's policies all come with a low $1,000 deductible.
    As Ben said it is a roll of the dice. Once an attorney gets involved you can just about be guaranteed that you are looking at a minimum of $10,000.

    IMVHO, a lower deductible might encourage an inspector to not look in that far corner of the attic or crawlspace. If they get a claim they have a low deductible to pay and it goes away. With a higher deductible you will think twice about not looking in that far corner!

    Scott Patterson, ACI
    Spring Hill, TN
    www.traceinspections.com

  31. #31
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    Default Re: A claim is a claim is a claim!!!!

    IMVHO, a lower deductible might encourage an inspector to not look in that far corner of the attic or crawlspace. If they get a claim they have a low deductible to pay and it goes away. With a higher deductible you will think twice about not looking in that far corner!
    If one is sued the cost of the premium plus deductible of $5K is a pretty expensive insurance policy. I wouldn't rely on the deductible to ensure ones thoroughness. Particularly in light of a disgruntled client who thinks the inspectors insurance is a warranty program.


  32. #32
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    Default Re: A claim is a claim is a claim!!!!

    Quote Originally Posted by Ben Garrison View Post
    Whether the inspector was or was not negligent was not up to the insurance company to decide. Their job is to defend the insured and adhere to whatever decision a judge or jury renders.
    So, I think it is reasonable from your post to infer that this was a decision rather than something that was settled out of court.

    In spite of my persistent questioning, I agree to a point that insurance is beneficial. As with Tom, I also wonder if insurance coverage makes a clearer target. I doubt an attorney is going to bother with suing someone who has nothing. The attorney will make no money in the process.

    Personally, I would not work without insurance, but I live in California, which seems to be the lawsuit capital of the world.

    Department of Redundancy Department
    http://www.FullCircleInspect.com/

  33. #33

    Default Re: A claim is a claim is a claim!!!!

    I would HOPE that a an inspector looks in the corner of an attic regardless if his deductible is $50 or $5,000. The quality of work should not be contingent on potential financial loss (deductible) to the inspector.


  34. #34
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    Default Re: A claim is a claim is a claim!!!!

    Quote Originally Posted by Ben Garrison View Post
    I would HOPE that a an inspector looks in the corner of an attic regardless if his deductible is $50 or $5,000. The quality of work should not be contingent on potential financial loss (deductible) to the inspector.
    You would hope so... But, I have overheard other inspectors talking among themselves that they have a low deductible so they don't mind if they miss something. It is just human nature to take or to consider the easier route.

    Scott Patterson, ACI
    Spring Hill, TN
    www.traceinspections.com

  35. #35
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    Default Re: A claim is a claim is a claim!!!!

    I never walk the attic as a routine procedure nor would I walk an attic with R40 insulation as you would have to move all the insulation in order to find any conceivable problem. Have conducted my inspection method in this manner for 19 years.

    If one worries to the degree you are concerned about being sued for every inspection or worried about the deductible this is not the business to be in.


  36. #36

    Default Re: A claim is a claim is a claim!!!!

    Quote Originally Posted by Scott Patterson View Post
    You would hope so... But, I have overheard other inspectors talking among themselves that they have a low deductible so they don't mind if they miss something. It is just human nature to take or to consider the easier route.
    Scott - if those inspectors don't mind if they miss something, I hope they don't mind when their rates go up or they get cancelled. That mentality makes my blood boil.

    I appreciate YOUR approach, however, in that your policy is for more catastrophic issues, not nickel and dime $hit. Ever wonder why health insurance premiums are always going up? Because people go to the doctor for every little bump and bruise. Wanna know why? Because it only costs them a copay and the insurance company pays the actual cost. If someone had to pay the full cost of a doctors visit, you know damn well they would not be going and money would be spent on aspirin and an icepack instead.


  37. #37
    Ted Menelly's Avatar
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    Default Re: A claim is a claim is a claim!!!!

    Quote Originally Posted by Ben Garrison View Post
    Scott - if those inspectors don't mind if they miss something, I hope they don't mind when their rates go up or they get cancelled. That mentality makes my blood boil.

    I appreciate YOUR approach, however, in that your policy is for more catastrophic issues, not nickel and dime $hit. Ever wonder why health insurance premiums are always going up? Because people go to the doctor for every little bump and bruise. Wanna know why? Because it only costs them a copay and the insurance company pays the actual cost. If someone had to pay the full cost of a doctors visit, you know damn well they would not be going and money would be spent on aspirin and an icepack instead.
    Amen

    I know everyone here with medical coverage does this so I am about to piss everyone off.

    Health care is not for a stinking splinter. Dig it out at home and clean it up.

    Health care in not for a little sniffle that Johnny has. Give him a box of tissues, kick him in the but to go out and play....in the great out doors

    Health care is not for the seasonal allergies. Go get some Sudafed at the drug store and a bottle of afrin.......suck it up...it will end.

    I grew up poor and we went to the Doctor only when we were about to die. I am 56 and still living and breathing.

    I know, I know. I have health insurance and darn it I am going to use it to death. You may wish to rethink that. Everyone was so worried about the uninsured that everyone had to pay for......Guess what! You were already paying for it and now that we are getting this wonderful health care everyone will soon, if not already, be paying 50% more....to pay for those uninsured...that we were already paying for.

    I know, I know. You company or your wife's job covers you so you still are going to use the hell out of the insurance because your boss already pays for it

    Think again. I am paying for it. Your neighbor is paying for it. The folks at your church are paying for it....NOT YOUR BOSS. He adds the cost to the service or goods you buy.

    Calm down Ted. You know this subject gets you riled up. End the rant.....OK.

    Not yet!

    Insurance is a joke. There is no risk to the insurance company that keeps getting put out there on this thread. If there is an inkling that the same profit is not there they raise the rates. The insurance company is risking absolutely nothing. It is just like health insurance. Everyone else is already paying for it. I repeat. There is no risk that the insurance company is taking. Please do not buy into that spin.

    It is kind of like the banks making absolute billions just off their fees and not from regular banking. I am all for capitalism but the world has lost their minds. It cannot and will not be able to go up forever. Wages. benefits, retirement, cost of insurance, a loaf of bread etc etc.

    We are in a pretty nasty recession and let me tell you. Look at the world around you. Every store, mall, restaurant is absolutely packed all the time because everyone feels so secure in their jobs and benefits and retirement etc etc etc.......Don't blink folks......or you may miss it all disappearing.

    Then what will everyone do when brought back down to planet Earth. I know...storm the capital buildings demanding the Gov takes care of you...I am actually in tears laughing as I write this. I know so many people like that.

    Sorry, way off thread here

    I will go sit in my corner. My inspection got canceled at the last minute.

    Now....That is the end of the rant...Sorry...Just watched some news. I try to avoid it lately.


  38. #38

    Default Re: A claim is a claim is a claim!!!!

    Quote Originally Posted by Ted Menelly View Post
    Amen

    I know everyone here with medical coverage does this so I am about to piss everyone off.

    Health care is not for a stinking splinter. Dig it out at home and clean it up.

    Health care in not for a little sniffle that Johnny has. Give him a box of tissues, kick him in the but to go out and play....in the great out doors

    Health care is not for the seasonal allergies. Go get some Sudafed at the drug store and a bottle of afrin.......suck it up...it will end.

    I grew up poor and we went to the Doctor only when we were about to die. I am 56 and still living and breathing.

    I know, I know. I have health insurance and darn it I am going to use it to death. You may wish to rethink that. Everyone was so worried about the uninsured that everyone had to pay for......Guess what! You were already paying for it and now that we are getting this wonderful health care everyone will soon, if not already, be paying 50% more....to pay for those uninsured...that we were already paying for.

    I know, I know. You company or your wife's job covers you so you still are going to use the hell out of the insurance because your boss already pays for it

    Think again. I am paying for it. Your neighbor is paying for it. The folks at your church are paying for it....NOT YOUR BOSS. He adds the cost to the service or goods you buy.

    Calm down Ted. You know this subject gets you riled up. End the rant.....OK.

    Not yet!

    Insurance is a joke. There is no risk to the insurance company that keeps getting put out there on this thread. If there is an inkling that the same profit is not there they raise the rates. The insurance company is risking absolutely nothing. It is just like health insurance. Everyone else is already paying for it. I repeat. There is no risk that the insurance company is taking. Please do not buy into that spin.

    It is kind of like the banks making absolute billions just off their fees and not from regular banking. I am all for capitalism but the world has lost their minds. It cannot and will not be able to go up forever. Wages. benefits, retirement, cost of insurance, a loaf of bread etc etc.

    We are in a pretty nasty recession and let me tell you. Look at the world around you. Every store, mall, restaurant is absolutely packed all the time because everyone feels so secure in their jobs and benefits and retirement etc etc etc.......Don't blink folks......or you may miss it all disappearing.

    Then what will everyone do when brought back down to planet Earth. I know...storm the capital buildings demanding the Gov takes care of you...I am actually in tears laughing as I write this. I know so many people like that.

    Sorry, way off thread here

    I will go sit in my corner. My inspection got canceled at the last minute.

    Now....That is the end of the rant...Sorry...Just watched some news. I try to avoid it lately.
    Now THERE is someone who gets it! Well, some of it...hahaha...

    Insurance premiums are based off projected losses for the next year. And part of that projection comes from trends and previous experience. When it comes to E&O insurance for the home inspector arena, the profit margins have decreased. Well, I can tell you that ours have at least. We have not raised our rates yet we're getting hit with a lot of claims. Poor FREA, right? Yeah... didn't think so.

    What really kills me is the real estate appraisal side of our business right now as we insure appraisers as well. Appraisers might as well attach the word "Scapegoat" next to the designation following their name. I had an analyst for Citi send me a letter two weeks ago saying that our appraiser overvalued a property by $400,000. Oh by the way.... the appraisal was done in 2006. Oh by the way... it was in Miami, Florida.

    What's scary is that appraiser premiums are (soon to be were) a fraction of what you guys pay. Yet the liability is outrageous now.


  39. #39
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    Default Re: A claim is a claim is a claim!!!!

    Ha!

    If we bought car insurance the way we buy health insurance half the population would have to stop driving because of the cost of insurance.

    When will people get it....


  40. #40
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    Default Re: A claim is a claim is a claim!!!!

    Face it insurance of any kind is just legalized gambling.
    The company is betting against you and you are betting on yourself.
    Example, life insurance, they are betting you won't die (they won't have to pay a claim) and you are betting you will die (your heirs will win.)

    A high deductible just means you are willing to take more of a risk on yourself (betting you you won't have a claim) but you are laying off some of the "big" action on the bookie just in case you are wrong.

    The only problem with insurance is that you never really win, the house wins because they control the odds.

    Jim Luttrall
    www.MrInspector.net
    Plano, Texas

  41. #41
    John Remark's Avatar
    John Remark Guest

    Default Re: A claim is a claim is a claim!!!!

    Ok-- I love discussions and this group is always making it exciting! :-). Thank you for all the comments and insights.

    But I have to put something straight. Insurance is not gambling. It is a means to manage risk. What this means is that instead of putting away money yourself and hoping that you will not have a problem you pay a regularized amount of money in an on-going basis to financially manage the risk.

    Most/many of you believe is self-insurance. Definition: Protecting against loss by setting aside funds from earnings, as opposed to buying an insurance policy.

    This is great as long as there are no claims or claims that are small enough to be handled by the money that you have put aside. In theory, this works great. In practice, not so well. Most small businesses lack the discipline or the cash flow to adequately put enough money aside.

    You may disagree in your particular case, but as a group small businesses have one fatal flaw- cash flow. Most of you are less than $100K per year. What is a reasonable amount of money to put aside? $1,000/year? $2,000/year? $5,000? I do not know. But I am sure you have seen your rates of insurance go down over the last 5 years.

    I have seen a comment here about creating a pool of inspectors to pay into and that you (the inspectors) would gain the benefits of low losses. That is a form of insurance. It is a mutual insurance company/Risk Purchasing group. It is an insurance carrier with the beneficiaries being the policy holders instead of an insurance carrier.

    This is not a bad way to go, but then someone has to run it, set rates, manage claims, pay out, defend.... you see where I am going. You have an insurance company regardless of what you do.

    But what happens if (and I do say if) a claim/s comes in that maxes out the monies on hand. What happens next? In the case of an insurance carrier, they raise money/take money from other portions of the balance sheet to pay off the loss. With Lloyds of London, they go to the syndicate members and say "gimme some more money". With the advocated Mutual/RPG depending upon how established it is, how big of a pool it may be able to go out to the capital markets, but most likely it will go to the policy holders and say "gimme more money".

    By paying an insurance carrier you pay someone else to take the risk. You have one flat fee you pay per year and getting managing and having the money is someone elses problem. We spread the risk around and get a large enough pool to absorb the losses. We manage the claims and defense and we do a good job of it, on the whole (I know each of you can identify a claim that was handled badly. We are not perfect, but we do a pretty good job overall)

    Again-- insurance (whether self or formal company) is a way to manage risk. Not to play the lottery, but a way to make the risk and potential payout manageable to and for the small business.

    Just my 2 cents

    John Remark
    First Indemnity Insurance


  42. #42
    Join Date
    Mar 2007
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    Ormond Beach, Florida
    Posts
    26,250

    Default Re: A claim is a claim is a claim!!!!

    Quote Originally Posted by Jim Luttrall View Post
    Face it insurance of any kind is just legalized gambling.
    The company is betting against you and you are betting on yourself.
    Example, life insurance, they are betting you won't die (they won't have to pay a claim) and you are betting you will die (your heirs will win.)
    Life insurance is not a good example .. you WILL die ... no ifs, no ands, no buts ... you WILL die.

    I would also say it differently: The company is betting on you and you are betting against yourself.

    Example: You buy auto insurance, you are betting that you *will* have an accident and therefore you want the insurance backing you. The insurance company is betting that you *will not* have an accident (or that it will be some else's fault or you will not have many).

    Jerry Peck, Construction / Litigation Consultant
    Construction Litigation Consultants, LLC ( www.ConstructionLitigationConsultants.com )
    www.AskCodeMan.com

  43. #43
    Ted Menelly's Avatar
    Ted Menelly Guest

    Default Re: A claim is a claim is a claim!!!!

    I repeat

    I do agree with John Remark to a point.

    As I said above. The insurance company takes no risk. They account for losses (not their losses. Money from everyone else). If the losses exceed their expectation one year there will be a blanket increase across the board to make up for those losses and then some.

    The folks at the insurance company will still get their paycheck and the execs will still make their rediculous amount of money and still be sitting in their comfy offices and very nice hpmes and drive to those very nice homes in their very nice cars to see their bought and paid for very nice wives.

    The insurance company takes no risks. Other than maybe AIG but that was just horrendous greed from the higher ups. And they still got their money They still got their bonuses. They still got their golden umbrellas

    The insurance company takes no risks. The only ones that ever may get hurt or go out of business are the small offices because they do not bring in enough money to survive which is a joke because when they go under the insurance company takes over the policies......................................The insurance company takes no risks. They are never risking their own money. They continuously play with everyone elses money. And we see the bigger they are they become to big to fail and still get their money

    It is organized crime at its best.


  44. #44
    John Remark's Avatar
    John Remark Guest

    Default Re: A claim is a claim is a claim!!!!

    Ted,

    Thanks for the response. I would not call it organized crime, but providing a service. You buy a computer-- you get what you pay for. If you want a better computer, you shop around and find the best value.

    Insurance carriers cannot "blanket increase" their customers. If they raise their rates beyond the affordability of their customers, then they will lose them to a competitor. Selection of the who they insure and what they will cover and how good they do this ultimately decides who is most profitable.

    But yes, we are "playing" with other people money. Our purpose is to allow YOU to manage your risk in a cost effective manner. We do take short term risks, but not long term, in that you are correct.

    My own program, in its first year of business got hit with back to back claims that ultimately came to over $500,000 in losses and trust me the program had nowhere near that in premium to offset the losses. Over the last 5 years, we have generated much more in premium, sustained some additional losses. But I have done a good job in selecting my clients and pricing myself and the program correctly, provided good service and advice to my clients and now have a program that can sustain itself.

    Making money is not a crime. Providing a good service is not a crime. Providing cost effective risk management is not a criminal enterprise. We are at risk in the short term, but we are in it for the long term and over the long term, we will be profitable. I make no apologizes for this.

    BTW-The AIG fiasco had nothing to do with the vast majority of the insurance components of their company. Most of the insurance components were always profitable. The insurance/regulatory laws and requirements kept AIG from getting their hands on that money to bail out the company because it would have made it almost impossible to meet their insurance obligations. The government protected you and your investment (insurance premium).

    Finally, you either believe in the concept of insurance (risk management offset) or you do not. For those that do, our service is here for you. For those that do not, you can choose to self insure and hope for the best.

    Regards,

    John Remark
    First Indemnity Insurance


  45. #45
    Ted Menelly's Avatar
    Ted Menelly Guest

    Default Re: A claim is a claim is a claim!!!!

    Not arguing with the insured part John. I am just making the statement that mother insurance company take no financial risk. If they have to pay out more than what is in the fund at bet they file, organize and continue on with risking everyone else's money.

    I am not attacking you but I just never went with the sugar coating

    You keep saying that you are taking the risk. There is no risk. You are working with everyone's money. Your own office may be lost. You might go out of business. You might lose an investment of opening your own shop but mom is taking no risk. You yes. Mom, no.

    Don't take it personally at all. You as an individual I am not attacking in the slightest.

    As one of my examples in a post above.

    Casinos do not get built at multiple millions because people win all the time.

    Insurance companies exist because the majority of folks won't be using there insurance and the rest that do use their insurance do not have claims adding over what the actual cost for the company are and profits are still made. What I mean by profits is everyone still gets paid along with all the buildings and overhead, bonuses and there is still enough to build another high rise. The bosses still get paid and another high rise goes up with the insurance companies name on it. If the bosses screw up as we saw in the recent past they still get their big salaries, bonuses, golden parachuttes for vast fortunes. Why, because they gamble with everyone elses money including the little insurance guy in his office and secretary.

    Yes, I have issues with vast fortunes being made for the sake of everyone else bad fortune or a down economy. It is criminal. It can be sugar coated anyway anyone wishes but it is criminal.

    When a company fails everyone at the top should fail first. Not the little guys at the bottom bringing in the revenue. Another thing. Until the actual revenue is in hand no one should get paid for anything. Never mind getting paid big bonuses for bringing someone on board that has a huge dollar figure. The dollars are not in there yet. The pay should go out as the revenue comes in

    This can go on forever John so I will end it here.

    Should folks carry insurance? Yes. I agree with you completely in that regards. It may just become their day sometime in the future where some fool sues and for one reason or another the suit goes thru. We are state mandated to have E+O but I never ever advertise it like some do. My inspection stops the moment I leave the home. There is no claim of insurance to protect or fools warranty of any kind. I tell my clients that there is something that will be missed. I do not allow their expectations to exceed reality. No fluff and no hype. Straight talk and a straight forward report.


  46. #46

    Default Re: A claim is a claim is a claim!!!!

    All business's play with other people's money. IF you took out a loan to start your inspection business, aren't you playing with the bank's money? Insurance companies do the same thing... can't fault them for it.

    By the way, there are a lot of misunderstandings about the AIG fiasco as it pertains to the insurance side of the business. As everyone knows, AIG was compromised of MANY subsidiary insuranance as well as as financial companies. But it was the finanancial companies who were heavily vested in mortgage backed securities, credit default swaps, etc, that led to their demise while the insurance side of the business steered clear. Probably because they are more stringently regulated on a state and federal level.


  47. #47
    Join Date
    Feb 2008
    Location
    Caledon, Ontario
    Posts
    5,005

    Default Re: A claim is a claim is a claim!!!!

    Any claims data on Nachi members?

    Are you seeing a trend of more complaints against Nachi members - say ASHI members, given the lax entry requirements and online certification that Nachi is notorious for?


  48. #48

    Default Re: A claim is a claim is a claim!!!!

    Quote Originally Posted by Raymond Wand View Post
    Any claims data on Nachi members?

    Are you seeing a trend of more complaints against Nachi members - say ASHI members, given the lax entry requirements and online certification that Nachi is notorious for?
    I don't keep track of what associations are more prone to claims nor would I publicize that information as it just adds fuel to the fire. It always amazes me when I watch the ongoing intra Association "propaganda." Too much time spent bickering over which association is better in my opinion. John Remark and I speak regularly and we work together on a lot of things yet we are competitors. I respect his market and he respects mine.

    If 80% of lawsuits are meritless, I dont' think that you can correlate the inspector's assoication affiliation with claims probability.


  49. #49
    John Remark's Avatar
    John Remark Guest

    Default Re: A claim is a claim is a claim!!!!

    I do not publish this information for proprietary reasons. That being said-- there is more correlation to claims in how you conduct your inspections and how many you do/year.

    I find that the inspectors with the fewest/smallest claims (as a percentage of their inspections) are those that:

    1) Take Pictures generally 100+/inspection
    2) Use a computer program (specifically designed for home inspections)
    3) Have a customer service/follow up program that contact clients at 90 days, 180 days and 11 months
    4) are in a regulated state that emphasizes training and preparation.

    In general low volume (sub 100 inspections/year) inspectors get fewer claims than high volume (250+/year) (and yes, I can hear the "Duuuhhhh that makes sense" out of all of you :-))

    Most of the claims I have had are from experienced inspectors (6+ years) in experience that are old school using a straight narrative/check list system that take few/no pictures. These create the least defensible claims with the greatest likelihood of settlement/loss.

    I hope this helps.

    John Remark
    First Indemnity Insurance


  50. #50
    Join Date
    Feb 2008
    Location
    Caledon, Ontario
    Posts
    5,005

    Default Re: A claim is a claim is a claim!!!!

    Thanks Ben and John. Good info.


  51. #51
    Alexander Hembery's Avatar
    Alexander Hembery Guest

    Default Re: A claim is a claim is a claim!!!!

    A very interesting discussion indeed!

    Up here in the "Great White North" we have had an entire so called 'national' prgramme put together based on the premise that there is a large problem with the competence of Canadian Home Inspectors. And yet, it seems that nobody involved can do anything but guess at the failure rate ( defined as 'client complaints / 1000 inspections). There have been guesses, and estimates and lots of statements about what is felt or thought, but no actual concrete facts. Then to add to the mystery there is no statistic that discusses nuisance suits, claims settled out of court, claims dismissed by the court etc etc etc.

    The situation is like asking scientists to calculate how many planets support intelligent life. By the time you sift through all the variables the answer is, at best, a guess. ( by my calculation there are no planets with intelligent life, including this one ! )

    We need facts in order to assess our industry and understand whether or not there actually is a problem with inspector competence north or south of the border.


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