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.


Beware Of The Streisand Effect

Because we live in an age where folks can vent their ill-founded outrage against service providers anonymously, instantly and globally with a few strokes on a computer keyboard, businessmen and women can now add “defamation” to “death and taxes” as a new “certainty”. And there is no shortage of online venues where these oh-so-put-upon umbrage mongers can grind their reputation-destroying axes, Angie’s List and yelp being two of the most popular venues. The Better Business Bureau is another.

A business person who finds his professionalism under assault on one of these sites by some thin-skinned yenta can be forgiven, perhaps, for wanting to defend himself forcefully via the response mechanism that most of these sites provide. In my experience, however, this is seldom a good idea because of a phenomenon that has come to be known as the Streisand Effect, after the well-known stage fright victim.

Ms. Streisand had sued a photographer who had taken aerial photographs of beachfront properties on the California coastline as part of a government project to document coastal erosion. One of the properties was hers and the suit sought suppression of the photograph of her property. You can guess what happened.

Prior to the filing of the suit, the photograph had only been downloaded six times. In the ensuing four weeks, over 400,000 internet users had visited the photographer’s site to gawk at the privacy-obsessed celebrity’s ostentatious crib.


Time Is Of The Essence

Recently a home inspector contacted me after receiving notice that his firm was being sued for failing to detect mold in a home that he had inspected several months before. Of course, he was not conducting a mold inspection. And the claimant was not the one for whom he had performed the inspection.

And folks still give me odd looks when I tell them that I never see a legitimate claim!

I asked him if the suit was the first notice that he had had of the claim. It was not. He had received a demand letter from the plaintiff’s attorney a few months before and turned it over to his insurance agent who forwarded to the inspector’s insurer.

A few weeks later he received a letter from the insurance company advising him of its “coverage position”, to wit, since the claim implicated a mold claim and since he did not have coverage for mold, it would not be providing any coverage.