Neutralizing The Client From Hell

My two recent posts on whether E & O Insurance is a waste of money have engendered a brisk meta discussion on a couple of the LinkedIn group discussion boards for home inspectors of which I am a member and on which I posted links to the two posts. Here and here.

In my experience, home inspectors’ default responses to questions on the utility of E & O insurance have always been negative, often vituperative, screeds. So I was more than a little surprised to read thoughtful posts from a majority of respondents who would never contemplate venturing out without it.

That’s essentially where I come down, as well, even though I am not all that risk averse in most matters. After all, I ski, pilot airplanes, run with scissors and am friends with Nick Gromicko. But I really do not want to be involved more than tangentially in a major distraction like having to defend myself in a lawsuit. Not only is litigation hugely expensive, it is also an enormous time consumer and those are two headaches that I am thrilled to be able to outsource for a relatively modest stipend.

One inspector commented that his insurance cost amounted to about 1.8% of the cost of the inspection and was, thus, a no-brainer, as far as he was concerned, for the peace of mind it provided.

One point eight percent sounds about right. Two hundred and fifty inspections at $400 would generate gross revenue of $100,000. One point eight percent of that would be $1800 or what an E & O Policy with a reliable carrier would cost. So for $7.20 an inspection, he has outsourced most of the sturm und drang that the Client from Hell can generate.

The thought suddenly occurs to me that the cost of ClaimIntercept™, the most effective home inspection claim termination device of all time, would only amount to zero point five percent [0.5%] of the cost of an inspection, $2.00 per inspection. Another no-brainer.

So for less than $10 per inspection, an inspector can protect herself with both ClaimIntercept™ and E & O Insurance. Put another way, if you increase your inspection fee by $10, you can charge each client the true actuarial cost of the risk of his becoming the Client from Hell.

Now that is a real no-brainer.