Search Results for “incentive” – Joe Ferry the Home Inspector Lawyer

The Cost of Your Lose-Lose Proposition

The county sheriff arrives on your doorstep. Your heart sinks. A home inspection client of yours is demanding you pay for the bad results that occurred months after your original inspection.

Your goal is too be dismissed from this massive claim – which includes you, the seller, the seller’s agent, the buyer’s agent, so on and so on – but that is increasingly difficult when there has already been a substantial calorie burn on the defense attorney’s part.

And it’s nearly impossible to be dismissed once your home inspection insurance company appoints legal counsel because its financial incentive is to settle the claim for your deductible (or offer it as part of the settlement) and walk away.

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All About Arbitration – Who Should Pay?

A Connecticut home inspector recently wrote to me about a “finding” he heard at a local law course, in which he has told that the American Arbitration Association (AAA) is now looking at DEFENDANTS for a substantial sum of money when a claim initiates.

This law course “professor” instructed the students to specify arbitration using an attorney qualified to arbitrate and with related experience.

He asked for my opinion – henceforth this week’s video tip!

I believe the AAA is feeling the financial pinch just like the rest of us and believes pushing the financial burden to the defendant is just what the doctor ordered to gin up a slew of new arbitration matters by removing the financial disincentive to the filing of ludicrous claims.

Home inspectors can head off this change by inserting key phrasing in their pre-inspection agreement. Watch the video tip below to find out the exact verbiage plus listen to why I believe the “professor” was wrong in saying that inspectors should demand an arbitrator have home inspection-related experience.
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Home Inspector Attorney Fees Clauses and Their Value

As I mentioned a few weeks ago, I am in my twenty-fifth year of practicing law, the last five of which have been heavily concentrated on the representation of home inspectors. Over the years, close to 1500 inspectors have attended my home inspector training at the Law and Disorder Seminar, which itself has undergone major revisions as I have continued to develop defense strategies and techniques in response to the large volume of claims that home inspectors are continually asking me to help neutralize.

My experience handling claims against home inspectors has caused me to completely reverse my position respecting provisions in Inspection Contracts that call for the prevailing party in disputes arising from the home inspection to be awarded its attorneys fees. The so-called American Rule is that each party to litigation is responsible for its own attorneys fees. The British Rule is that the prevailing party is awarded its attorneys fees.
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The Costs of Defending a Home Inspector Lawsuit (2 of 2)

One of the more unpleasant experiences in life is answering your door and finding the county sheriff or one of his deputies on your doorstep asking if you are one of the defendants named in the copy of the Complaint that he is holding, a Complaint that has been filed by one of your home inspection clients who is claiming that you failed to uncover certain defects during your inspection and that that lapse on your part is now costing him a lot of money to rectify.

This is especially disturbing when it is the first inkling that you have that this particular client had any beef with you whatsoever. This is, perhaps, the only time when no news is not good news. As I have written elsewhere on this website, while it is still possible for me to persuade the plaintiff’s attorney to voluntarily dismiss you from the suit, it is less likely when there has been a substantial calorie-burn on the attorney’s part. And it goes without saying, I trust, that it is impossible to do so once your home inspector insurance company has appointed defense counsel because their financial incentives are contra.
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The Costs of Defending a Home Inspection Lawsuit (1 of 2)

As a frequent contributor to online inspection forums, I regularly get private email from professional home inspectors seeking my opinion on legal matters. Recently a reader wrote:

“Joseph, So, absent an E&O home inspector insurance policy, inspectors are exposed to the realities of defending a claim, which in 98% of the cases you have seen, are without merit. What do you estimate the cost to the inspector are to defend themselves, considering court costs, attorney, depositions, etc?”

Fortunately, not every claim involves a lawsuit. Most claims begin life as a complaint from a disappointed client. And most experienced business persons have had to deal with customer complaints at one time or another in their careers, and have no problem whatsoever rectifying a legitimate complaint to the customer’s satisfaction.
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Who Should Pay For Arbitrations?

After reading one of my archival posts on Arbitration, Connecticut home inspector Martin Greenberg wrote:

“Joe, I recently attended a CT Law course taught by an attorney. He indicated that the AAA has recently changed its practices and is now looking to the defendant for a substantial sum of money as the case initiates. He advised to specify arbitration using an attorney qualified to arbitrate and with related experience.

What is your opinion?

Martin”

I think that AAA may be feeling the economic pinch as much as the rest of us and must think that transferring the financial burden to defendants is just what the doctor ordered to gin up a slew of new arbitration matters by removing the financial disincentive to the filing of ludicrous claims.
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If You Have ClaimIntercept™, Do You Still Need E & O Insurance?

A home inspector recently asked me a question that I suspect has crossed the minds of a lot of home inspectors who regularly visit this website. “If I have ClaimIntercept™,” he asked, “do I still need to have E and O Insurance for Home Inspectors?”

He has been an inspector for several years and has conducted a couple of thousand inspections. When he started out as an inspector, he owned a home inspection franchise and the franchise agreement required him to carry professional liability insurance. When he parted company with the franchisor a few years ago, he dropped the E and O insurance because he felt that it only protected the client, not the inspector.

That is a very common sentiment among home inspectors, almost all of whom have either personally had a bad claim experience with a professional liability carrier or have a close colleague who has. Interestingly, the bad experience almost never involves the insurer’s failure to pay a legitimate claim. Rather, it predominantly involves insurers who, in inspectors’ minds, seem to have adopted a default posture of settling illegitimate claims rather than aggressively defending them. There is certainly no shortage of anecdotal evidence on home inspector message boards to support this widely-held belief.
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From The Mailbag

Almost every day, I get email correspondence from an inspector who is about to get jammed up royally by the unholy alliance of his insurance company and its panel defense counsel. I really wonder why any inspector, who chooses to be insured or who has to be insured by law, would go anywhere other than Lockton, the only home inspector professional liability insurance provider that endorses my claim response techniques and the only one whose default strategy is not “surrender”.

Consider this very typical situation:

Mr. Ferry:

I am fearful that it may be too late in the process for me to avail your services. I just today found out about your services.

I am in the middle of a claim against me and my Errors and Omissions Insurance here in [location redacted].

Turns out my insurance company is attempting to defend the claim against me but under a very specific “reservation of rights” clause that appears to ultimately leave me with representation but no coverage. The Insurance Company is also looking for my deductible up front.
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