Insurance

[Wayne McLintock]

Just starting out in the world of home inspector. Can any one out there have some advise on what insurance I should have. I do hjave general liability with my construction business, would this be ok. I do know I have to call my broker, but thought I would fire this question out to you guys who have been involved in the business for awhile, Thanks, Wayne

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[Jack Feldmann]

Besides General Liability Insurance, the 2nd most common insurance home inspectors have is E&O.
Some States require it. I carried E&O long before I was required to, because I thought it was a prudent thing to do.
Many inspectors don't carry it, for a variety of reasons.

[Harry Janssen]

Most professionals carry E&0 insurance,home inspectors should also carry it for their benefit,not the clients.

Do not promote the fact you have,it is not a marketing tool,for reason explained above.

[Scott Patterson]

Most professionals carry E&0 insurance,home inspectors should also carry it for their benefit,not the clients.

Do not promote the fact you have,it is not a marketing tool,for reason explained above.

I will echo what Harry posted! Insurance should never be advertised or used as a marketing tool. Inspectors or anyone who advertises that they have insurance is an idiot.

[Ken Rowe]

I will echo what Harry posted! Insurance should never be advertised or used as a marketing tool. Inspectors or anyone who advertises that they have insurance is an idiot.

So why exactly am I an idiot Scott? I've been doing inspections over 10 years, over 5,000 total and have never had an insurance claim. I get tons of business from people who chose me over other inspectors because I am insured. Consumers are taught to interview their potential inspector to find out if they're insured. Why not tell them right up front? Why hide the fact that you're a professional and not some fly by night inspector?

Advertising you have the proper professional insurance will not increase your claims. Screwing up the inspection will.

[Raymond Wand]

Personally I would not brag about never being sued.

Insurers are notorious for paying out small claims simply because its economical to do so.

Number of inspections does not equate to doing a good job - necessarily.

[Jack Feldmann]

Ken,
The one time I was sued WAS because I had insurance.
I was being deposed in an unrelated case when the other attorney, I guess, realized that I was the one that his other client was going to involve in her lawsuit. His questioning then started to ask me about when I was incorporated, and what kind of insurance I had, etc. It was very odd at the time because it had nothing to do with the case I was acting as an expert on.

A few days later I get served. I got it thrown out because the woman was never a client of mine, but she bought a house I had inspected for someone else three years before.

I am convinced that the only reason I was included was because I had insurance.

[Ken Rowe]

Personally I would not brag about never being sued.

I never said I've never been sued. I said I've never had an insurance claim. I've been sued once in the past. No warning what-so-ever. Small claims, no deposition, for $7500. Never turned it in to the insurance co. I won.

Insurers are notorious for paying out small claims simply because its economical to do so.

Really? Give me a couple examples where they've paid out on prior claims against you. Seems everyone has heard these "stories" but have had no first hand experience.

Number of inspections does not equate to doing a good job - necessarily.

I never claimed it did. I claimed I've never had an insurance claim in my entire career. I stated screwing up the inspections will increase your chances of an insurance claim. But I never said anything about the number of inspections equates to a good job.

[Ken Rowe]

The one time I was sued WAS because I had insurance.

I got it thrown out because the woman was never a client of mine, but she bought a house I had inspected for someone else three years before.

I am convinced that the only reason I was included was because I had insurance.

What you're saying Jack doesn't make much sense. You didn't mention anything about your insurance company settling the claim or paying out without going to court.

When there's a real estate related lawsuit, everyone involved gets sued. It doesn't matter if you hold any responsibility to the claimant or not. That gets sorted out by the judge. In your case some agent gave a copy of your report to the claimant, thus you became a party...just not a responsible party.

[Jack Feldmann]

It didn't make sense to me either...however, The attorney would never had included me in the lawsuit had I not had insurance, and a chance for them to kick in. He said as much.
I did have to turn it into my insurance company. What could have been a simple phone call between attorneys ended up with my attorney showing up in court asking the judge to exclude me from the case. It took all of 90 seconds.
It also cost me around $1500 of my deductible.

[Ken Rowe]

It didn't make sense to me either...however, The attorney would never had included me in the lawsuit had I not had insurance, and a chance for them to kick in. He said as much.
I did have to turn it into my insurance company. What could have been a simple phone call between attorneys ended up with my attorney showing up in court asking the judge to exclude me from the case. It took all of 90 seconds.
It also cost me around $1500 of my deductible.

So, issue #1, you didn't advertise that fact that you carry insurance and got sued anyways. It didn't matter if you advertised it or not in this case.

The other issue I see here is your insurance company didn't automatically pay the claim, which is what Raymond is claiming. It sounds like they set you up with an attorney and fought it. The fact that you had to pay a deductible doesn't really matter, since you chose the policy and provider.

Thank you for backing up my claims that advertising being insured doesn't result in a higher rate of claims or automatic payouts by the insurance company.

[Jack Feldmann]

While I did not advertise that I had insurance, I wouldn't have been included if I hadn't had any.
Yes, the insurance company did not automatically cave, and set me up with an attorney.

In another situation, I had a complaint and when I felt that it might not be able to be resolved without going to court, I contacted my insurance company and notified them of my situation. The staff attorney helped/guided me through communication (between me and my client) and gave advice. When I thought I was going to have to call in a structural engineer to act as my expert, I was told that his fee would be counted toward my deductible. At no point did he indicate the insurance company wanted to jump in and settle.

In the end, I settled for an amount that was between my inspection fee (as per my contract) and my insurance deductible. I probably would have prevailed had we gone to court, but I really didn't want to let it get that far.

[Mark Hagenlock]

Just starting out in the world of home inspector. Can any one out there have some advise on what insurance I should have. I do have general liability with my construction business, would this be ok. I do know I have to call my broker, but thought I would fire this question out to you guys who have been involved in the business for awhile, Thanks, Wayne

Wayne, I would be very surprised if your insurer allowed you to use your contractor's general liability policy on a regular basis as a home inspector. I believe you will need a separate policy. On the other hand it wouldn't hurt to ask if a general liability policy for your home inspection business might be extended to your construction business.

[Raymond Wand]

Ken asked in part ..

Really? Give me a couple examples where they've paid out on prior claims against you. Seems everyone has heard these "stories" but have had no first hand experience.

Well I have had first hand experience with the insurer back in 94 paying out for a latent defect.
Litigant sought $22K. Insurer offered her $15K. Problem solved. Much cheaper to pay out $15k then spend $25K+ taking it to court. My insurer and insurance appointed lawyer was a joke.

Vendor did not disclose foundation issue which had been purposely concealed. Insurance adjuster agreed with latent defect not my negligence, but vendors where elderly and had no money so the insurer would not claim against them! Payout plus my premium, and deductible.

I also know others who felt they were sold out by insurer settling solely for financial reasons.
There have been many stories over the years on this forum containing anecdotal stories of insurers paying out for financial expedience.

[Ken Rowe]

Raymond,

Is this directly related to you advertising the fact that you carried insurance? Remember my claim is that "Advertising you have the proper professional insurance will not increase your claims."

I'm looking for someone with first hand experience, who has advertised they have insurance and have seen an increase in insurance claims. My experience of 10 years and 5,000+ inspections without a single claim tells me there is no correlation.

So far this thread has 175 views and no one is coming forward with first hand experience.

I'd still like an explanation from Scott as to why he called me an idiot.

[Raymond Wand]

Back in 91 I carried E and O and advertised same. Thought it was good marketing. Sadly I did not listen to my peers who advised not to advertise. When I was sued one of the first things out of the mouth of the complainant was to ask if I was insured.

Premiums went up subsequently.

Insurers have in the past recommended not to advertise insurance at least Canadian carriers.

So yes I guess I am one of the 175 who viewed this thread with first hand experience.

Btw did you do all 500 inspections over the ten year period? Thats 500 inspections a year!

[Raymond Wand]

A survey on insurance from a Cdn. point of view.

[Scott Patterson]

So why exactly am I an idiot Scott? I've been doing inspections over 10 years, over 5,000 total and have never had an insurance claim. I get tons of business from people who chose me over other inspectors because I am insured. Consumers are taught to interview their potential inspector to find out if they're insured. Why not tell them right up front? Why hide the fact that you're a professional and not some fly by night inspector?

Advertising you have the proper professional insurance will not increase your claims. Screwing up the inspection will.

Ken, it is just my opinion and that opinion is based on right at ten years of expert witness work with many cases working with or defending home inspectors. On the other hand I have worked for many plaintiffs with cases involving home inspectors. Yes, insurers will settle if they believe they will save money. Trials are expensive, with attorneys making upwards of $300+ per hour and experts in the $1000-$2000 a day range not to mention the pre-trial cost that can exceed the cost of the actual trial by tenfold.

Go ahead and advertise to the ends of the earth that you have insurance, that is your personal business decision. If anyone chooses to do this, you might want to contact your insurance provider and get their opine on it just cover yourself.

I'm not a PC type person, sometimes it takes a colorful word like "idiot, fool, Jezebel, etc...) to drive home a point, it is then up to the reader to decide if the shoe fits. Many times it takes a verbal jolt for an individual to realize that what they perceive as okay might actually have a negative impact.

[Ken Rowe]

A survey on insurance from a Cdn. point of view.

Thanks for the survey, it also proves my point. 25% of those surveyed have filed E&O claims. However, only 8% of those surveyed advertise they are insured. To me this mean over twice as many claims were potentially filed against those who don't advertise compared to those that do. It also shows that half of all surveyed think its an unfair business practice to advertise they are insured. Hence the fear mongering attitude given on discussion boards.

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Ken, it is just my opinion...

I am not looking for opinions, I'm looking for hard facts.

By the way, people who put ACI at the end of their names are morons. Nobody outside of ASHI even know what it means.

[Raymond Wand]

By the way, people who put ACI at the end of their names are morons. Nobody outside of ASHI even know what it means.

Got any hard facts to back that claim up?

[Rick Cantrell]

I tend to agree with Ken.
Advertising that you have E&O does not significantly increase your chances of being sued any more that just having E&O without advertising it.
However having E&O does increase your chances of being sued.
My reasoning is:
Few people PLAN to sue you when they are looking for a HI.
But knowing you have insurance is something that most shoppers will view as an indication of a professional. So advertising you have E&O is a marketing advantage.

Having E&O does increase you chances of being sued.
The reality is if you have insurance and anything goes wrong, your fault or not, you most likely will be included.

I do not have E&O, but if I did I would most likely advertise it.
I think of it like this, if I am going to increase my risk of being sued I may as well increase my marketing appeal as well.

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Again I think I have to agree with Ken.
I have no idea what ACI is.
However I don't think anyone is a moron if they use it.

[Scott Patterson]

By the way, people who put ACI at the end of their names are morons. Nobody outside of ASHI even know what it means.

Ken, you are welcome to your opinion; but if more folks who have earned this level of membership (like you) promoted it more then it would be acknowledged more by the public.

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[Wayne McLintock]

Ken, you are welcome to your opinion; but if more folks who have earned this level of membership (like you) promoted it more then it would be acknowledged more by the public.

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Well thanks to you all that replied, look's like I stired up quite a debate. Think I will get the E&O just to be on the safe side, dont think I will advertise it, but keep it as a get out of jail card if the unexplained and unexpected shall raise its ugly head.

[Ken Rowe]

I tend to agree with Ken.
Advertising that you have E&O does not significantly increase your chances of being sued any more that just having E&O without advertising it.
However having E&O does increase your chances of being sued.

I agree with this statement Rick. And, like you said, if you're gonna have it why not use it to get a leg up on the competition?

Got any hard facts to back that claim up?

Yep, I'm an ACI (ASHI Certified Inspector) so I have first hand knowledge. You see "I'm not a PC type person, sometimes it takes a colorful word like "idiot, fool, moron, etc...) to drive home a point, it is then up to the reader to decide if the shoe fits. Many times it takes a verbal jolt for an individual to realize that what they perceive as okay might actually have a negative impact." Then again sometimes I just say things to be an azzhole.

[Raymond Wand]

Then again sometimes I just say things to be an azzhole.

Well like I have said in the past, whoever told you to be yourself, gave you bad advice.