E&O Insurance Does NOT Paint a Target On Your Back
Many home inspectors believe that if they tell a client and his/her lawyers that they don’t carry professional liability insurance, the claim will just disappear.
However, there are no shortage of clients making meritless claims. I see them every day. Would no insurance from which to collect on a judgment make the claim just go away? If claimants aren’t deterred by no rational basis for their case, how likely is it that they will stop in their tracks when they realize you don’t have insurance?
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Home inspectors often observe that putting everything in their spouse’s name would make them financially insolvent and protect them against greedy, reckless clients searching for financial blood.
Home inspectors love Limitation of Liability clauses because, in most U.S. jurisdictions, they put a cap on a home inspector’s potential liability for negligence. However, these same clauses also stifle a home inspector’s earning potential.
If you’ve seen any effective product-based television advertising, you know all about Brand X, the competing product that left ring around the collar, caused soapy buildup and dry lifeless hair.
Many home inspectors believe that competence and experience guarantee a claim-free existence. They are stunned when they receive their first claim (likely a meritless one) after 20 years on the job.
Mold identification is not within any home inspection standard of practice, but a home inspector told me that his insurance company settled a mold claim for $250,000. That truly made me question the sanity of the claims executive.
In the discovery phase of a lawsuit, laywers ask witnesses questions under oath that are recorded by a court reporter. Believe it or not, lying is commonplace!
I remember the advice I received from a savvy real estate investor as I was about to purchase my first house.
By the time a home inspector contacts me, he or she has already made exhaustive attempts to explain to an irrational client why a leak in a roof six months after it was reported as “near the end of its life expectancy” in an inspection report is not grounds for a claim against the home inspector.
Contract clauses sometimes do not mix well. There is at least one state that will nullify contractual limitation of liability clauses when paired with arbitration clauses. (Do you know which state that is? Let us know on Facebook, Twitter and/or LinkedIn.) And we all know – or should know – that arbitration clauses in pre-inspection agreements are valuable.