There is nothing that boosts my confidence in the absolute need for the service that I provide this industry quite like going back out on the road with my home inspector training at the Law and Disorder Seminar and meeting a bunch of full-time professional home inspectors and listening to their stories of E and O insurance for home inspectors claim mismanagement of such surpassing magnitude that I am often half-tempted to excuse myself, call my broker and ask her to short the entire insurance industry. Only my fear of prosecution for trading on inside knowledge prevents me from doing so.
At last Thursday’s seminar in Plymouth Meeting, Pennsylvania, one of the home inspectors in attendance related that, some years before, he had had a mold claim on which his E and O insurance for home inspectors company eventually paid $250,000. Do you not have to question the sanity of an insurance company claims executive who would authorize the payment of $250,000 on a mold claim when a. the identification of mold or any other toxin is not within any extant industry Standards of Practice and b. coverage for mold claims is specifically excluded from the insurance policy?
As it happens, I was, at that very moment, in the process of extracting a home inspector client from a lawsuit wherein the gravamen of the complaint was that the inspector had failed to detect the presence of lead paint. I simply called the plaintiff’s attorney and apprised him that the inspector had not been engaged by his client to detect the presence of lead paint, that the inspector’s inspection agreement specifically excluded lead paint detection from his services and that the state specifically forbade home inspectors from inspecting for the presence of lead paint unless the inspector possessed a license from the Department of Health and Senior Services which this inspector did not possess.
The attorney agreed to dismiss my client provided that what I was telling him checked out. After securing the attorney’s agreement to take no action adverse to the inspector without appropriate timely notice to me, I wrote a letter to him that established and documented all the points that I had made in our telephone conversation. A week before last Thursday’s seminar, the attorney called to tell me that he was going to dismiss my client and his corporation – “Your letter laid it all out” – but needed to clear it with his own client first because “Otherwise, I’ll need to hire you to defend me when my client sues me for negligence.”
The Saturday after the seminar, the attorney telephoned me to tell me that he had spoken to his client and was going to file a dismissal of my client and his corporation the following week.
The entire resolution of this claim – start to finish – took around four hours of professional time, at a cost well below the client’s deductible, which would have been consumed in its entirety under traditional claims procedures followed by every other insurance company that is active in the home inspector professional liability market.
And there is no doubt that those insurance companies would also pay something on this completely unmeritorious claim just “to get rid of it”, the theory being that they are going to have to pay someone, either the claimant or their own attorneys. So it is better to be done with it.
Meanwhile, the inspector, who operates in a mandatory E & O jurisdiction, would now have a scarlet letter on his underwriting file. Uh, oh. Better get rid of this “bad” inspector.
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