Is E & O Insurance A Waste Of Money? Part Deux
My recent post, Is E & O Insurance A Waste Of Money, prompted this comment from Arizona Home Inspector, Jeff Byfield:
Joe my question is, if you didn’t have insurance would you even be considered in these frivolous law suits that greedy people and unscrupulous attorneys pull you into? What can they really sue you for besides your ladder and a few tools, or is there more to this than what I’m thinking?
This is a question that comes up every time I present the Law and Disorder Seminar and every time I write about professional liability insurance.
Many inspectors believe that, if there is no pot of gold – insurance – at the end of the rainbow, claimants and their attorneys will simply fold their tents and go away. Problem solved. Unfortunately, as I have written extensively elsewhere on this site, lawsuits seldom end well for uninsured defendants and their uninsured status certainly does not immunize them from lawsuits.
While I have successfully persuaded nearly 350 claimants and their attorneys to abandon their claims, it was because I laid out compelling reasons for doing so bolstered by Force Ten levels of logic. They did not do that because the inspector had no insurance, they did it because I convinced them that they had no claim.
Some inspectors who have been following me for years and are familiar with my phenomenal success at terminating home inspection claims aborning have wondered to me what the point of having professional liability insurance is, if 97% of claims go away with a letter. Why, indeed?
Well, because, in my experience, about 3% of claimants and attorneys are knuckleheads and will continue to press a claim, notwithstanding that it has no chance of success. And for those claims, you will need either insurance or a lot of money.
Nonetheless, the temptation to roll the dice that your claimant will be among the sensible 97% and not the knucklehead 3% might actually be a viable risk management strategy, if E & O Insurance were preposterously expensive. It isn’t.
Depending on your tolerance for risk, E & O coverage with Lockton Affinity can be secured for as low as $1500 a year by reducing coverage limits and raising deductible amounts. Click the blue “GET A QUOTE” button to the right of this post to learn more.
The problem with E & O Insurance, thus, is not its expense, it is the way that the insurance companies hang inspectors out to dry when a claim is made.
My approach to home inspection claims completely solves that problem and is way past its proof-of-concept stage. Lockton Affinity has completely embraced my approach.