The number one complaint that I get from Home Inspectors on the home inspector training Law and Disorder Tour is about E & O Insurance companies for home inspectors. Their perceived default claim posture of caving in and paying unmeritorious claims – usually with a hefty contribution from the inspector pursuant to the deductible feature of the insurance policy – sends inspectors over the edge. And justifiably so, in my opinion.
Having quashed over 200 claims at the demand-letter stage in the last four-and-a-half years – and several more where the first notice of claim was an actual lawsuit – I am confident that I have solved that problem – at least for those insured under the Lockton Affinity E & O Program described elsewhere on this site.
The second-most common complaint that I get is that it is nearly impossible for home inspectors to charge fees commensurate with their skills and level of experience because the competition is chasing business by quoting absurdly low fees. So inspectors feel that they have to match those fees to protect market share.
A few years ago, well-known Home Inspector Marketing Coach Ken Compton [http://www.staybusyallyear.com] invited me to speak at the Annual Workshop that he conducts for his coaching clients. The Workshops are now conducted in Naples, Florida but this one was in Jasper, Georgia.
The Workshops are intense plenary sessions that go from 8:00 a. m. to 5:00 p. m. for three full days and feature top speakers that teach the coaching clients how to by-pass real estate agents, go directly to the consumer, how to use blogs, video and a whole host of other techniques to outmaneuver your competition. It was fascinating to me because a lot of the techniques are obviously transferable to other enterprises.
At the end of each day, everyone assembles for cocktails and dinner and socializing, including the speakers who are always quite generous with their time and advice. I was scheduled to speak on the second day of the Workshop for an hour and forty minutes and I was turning over in my head what material from the four-hour Law and Disorder Seminar I would present in this truncated session, keeping in mind that this was a Workshop on how to increase your revenue.
I was still thinking about it up until shortly before it was my turn to speak and then it came to me. In a moment of inspiration, I solved the problem of the low-baller.
Almost everywhere that it is allowed – which is pretty much everywhere – home inspectors will contractually limit their liability to the amount of the fee charged for the inspection. So why not eliminate the Limitation of Liability provision and charge more for the inspection?
“Have I lost my mind?” you ask. Absolutely not. ClaimIntercept™, my proprietary method of terminating home inspection claims aborning, is well past its proof-of-concept stage. Virtually all claims – over 99% – against home inspectors are completely defensible as I have conclusively demonstrated time after time over more than 200 cases for reasons explained at length elsewhere on this site.
Here’s how the colloquy would go with a prospect. What’s the first thing out of your prospect’s mouth when you answer the phone? All together now. “How much do you charge for a home inspection?”
You say: “I’m pretty sure that I charge more than anyone whom you have talked to. Would I be correct in saying that you probably already have 3 or 4 quotes of $350 [or whatever it is in your market]?”
The prospect will agree. You say “I will tell you why those inspectors can charge as little as that. They don’t stand behind their inspection reports.”
The prospect: “Huh?” You: “They limit their liability to the amount of the inspection fee. So, if they miss something major in their inspection, they’ll give you your money back and walk away. Would you go to a doctor who told you “Hey, if you die on the operating table, I’ll give your family back my fee for services?”
The prospect, who cannot fail to see the perils of going with a low-baller at this point, will then ask “So what do you charge?” And now you have him.
If you say “I charge $500 [or whatever $150 above your market is],” the prospect will not be thinking that he’s paying $500 for an inspection that should only cost $350. He will be thinking that he’s paying $150 more than the cost of a worthless inspection.
Which is not to say that the low-baller might not do just as good an inspection or, perhaps, even better than you would. Keep in mind that a lot of very good inspectors are forced into being low-ballers by cut-throat competition. And real estate agents.
Now the caveats: DO NOT DO THIS IF YOU DO NOT HAVE E & O INSURANCE THROUGH LOCKTON AFFINITY and DO NOT SUBSCRIBE TO ClaimIntercept™ and ARE NOT GETTING AT LEAST $150 MORE PER INSPECTION.
Here are the five steps to a good night’s sleep and higher inspection fees:
One: Get E & O Insurance through Lockton Affinity http://inspectors.locktonaffinity.com or by calling 800-803-9552.
Two: Subscribe to ClaimIntercept™.
Three: Eliminate the Limitation of Liability clause from your Pre-Inspection Agreement.
Four: Demand at least $150 above market for your superior inspection service.
Five: Perform the superior inspection service and write the superior inspection report that you are capable of performing and writing by reason of your training, skill and experience.
The extra $150 per inspection will vastly outstrip the cost of E & O Insurance and ClaimIntercept™.
I have every confidence that only a very small percentage of home inspectors who read this post will implement this strategy, but know this: every inspector who has done it, has become a huge fan of the Home Inspector Lawyer.
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