home inspection claims

Almost every day, I get email correspondence from an inspector who is about to get jammed up royally by the unholy alliance of his insurance company and its panel defense counsel. I really wonder why any inspector, who chooses to be insured or who has to be insured by law, would go anywhere other than Lockton, the only home inspector professional liability insurance provider that endorses my claim response techniques and the only one whose default strategy is not “surrender”.

Consider this very typical situation:

Mr. Ferry:

I am fearful that it may be too late in the process for me to avail your services.  I just today found out about your services.

I am in the middle of a claim against me and my Errors and Omissions Insurance here in [location redacted].

Turns out my insurance company is attempting to defend the claim against me but under a very specific “reservation of rights” clause that appears to ultimately leave me with representation but no coverage.  The Insurance Company is also looking for my deductible up front.
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As I mentioned last time, I had returned home from a few days of R and R at the shore to a torrent of fresh home inspection claims, several of which were actual lawsuits. The lawsuits were all multiple-defendant affairs comprising multiple counts and exceedingly vague allegations that made it impossible to ascertain exactly what it was about the inspection that was aggrieving the plaintiff so.

Nevertheless, after speaking with the inspectors and then the attorneys, I was not surprised to learn that the claims were all for something that was highly defensible: outside the scope of the Standards of Practice; or concealed at the time of the inspection; or disclaimed in the report; or discovered and reported; or working then but not working now.

Not surprised because that is universally the case.
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My friend Hugh Gilmore is a local Philadelphia celebrity and, I hasten to add, justifiably so, whom I met rather serendipitously about a year ago. He writes a widely read column, in one of our local community newspapers, that celebrates the quaint pastime of reading books. Imagine. So that’s how I first came to “know” him.

Of all the gin joints in all the world, we met in a local liquor store – go figure! – during the Christmas rush in 2010. I espied him, relying for markers on the Seurat-like pointillist portrait that accompanied his column, as I was checking out and asked “Are you Hugh Gilmore?”

He owned up to the make, even while expressing astonishment that it was even possible to do so, given the source. Not the first time I’ve been ordered to move to the head of the class!
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One of the collateral benefits of being an itinerant speaker is having the ability to catch up with friends who have pulled up stakes and scattered across the continent while I happen to be moving about the country fulfilling a speaking invitation.

As you read this, I will be en route to Columbia, South Carolina to speak to the Winter gathering of the South Carolina Association of Home Inspectors on Saturday morning. I’m heading to Savannah, Georgia this morning because I have two high school buddies who have retired to Hilton Head and they were kind enough to invite me to stay a few days with them on either side of the speaking engagement.

I also have a friend from Artillery OCS who owns a seafood restaurant in Hilton Head and I am hoping to be able to stop by to see him, as well.

Of course, I am also looking forward to meeting the home inspectors who have registered for the seminar. If this South Carolina seminar is even half-way typical of others what follows is bound to happen.
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When I first launched this website, my biggest concern was whether I would have enough material to meet my self-imposed twice-a-week publishing goal. I didn’t want to have a site that inspectors would come to once, never to return which is the justly deserved fate of static sites that never change after their initial publication.

So twice a week, I confront the white bull. That’s the name that famed bullfight enthusiast Ernest Hemingway gave to the blank page, the quite worthy adversary that writers regularly face.

“It’s a real albatross” I explained to a lawyer friend over lunch last week even as I was enthusing over the beyond-all-expectations effect the site has had on virtually every aspect of my practice: from an immeasurably heightened profile to new clients to great testimonials to speaking engagements. All together, a pretty good return on an investment of about four hours of research and writing a week.
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A reader recently wrote to me: “One quick question comes to mind in reviewing your E and O insurance for home inspectors blog.  You clearly state a number of times that virtually all claims against home inspectors lack merit and/or can basically be quashed at the point of the initial demand. This being true, why then would one even need to consider E+O when you have made it abundantly clear most if not all E+O claims against inspectors can be successfully defended, likely at a fraction of the cost of insurance?”

In my experience, only three of the over 500 claims that inspectors have asked me to respond to were valid claims. That’s less than one percent. Am I seeing a different segment of claimants than the typical E and O insurer for home inspectors? I very much doubt that I am.

Yet, while my success rate at terminating these claims has been, by any metric, phenomenal, I would still hesitate to counsel inspectors to forgo the back-up protection that an E & O insurance policy with a solid company provides for two very important reasons. One, about 15 % of the time, the first notice of claim is an actual lawsuit. In other words, I will have had no prior opportunity to prevent the suit from being filed in the first place. And while I have successfully persuaded plaintiffs’ counsel to dismiss inspectors from lawsuits multiple times, that is a much more difficult trick with a much lower success rate. Two, my responsive letters are only successful at dissuading claimants 97 % of the time. That means that three knuckleheads out of every hundred cannot be persuaded that they have no claim. In those cases, you will have to hire private counsel and litigation is one of the most expensive undertakings imaginable.
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When it comes to unreasonable, hard-to-please consumers, in my opinion you really have to go some distance to top the average house buyer. Throw in unreasonable and vindictive and you have a good idea of the sort of nincompoops to whom I have lately had the pleasure of explaining the facts of life: to wit, that their intemperate, unwarranted and extraordinarily foolish decision to post defamatory rants against their inspector on social media sites would very likely permanently impoverish them, if not immediately removed.

In every case where I have had to intervene, there existed no grounds whatsoever for impugning the inspector’s work product. Of course, as I have conclusively demonstrated, that is almost always the case.

For that reason, a lot of inspectors believe that they can persuade the slanderer to remove the offending post by sheer logic. And you would think that that would work. After all, if the issue was something that was outside the scope of the inspection, or concealed, or disclaimed, or found and reported, or clearly working when the inspection was performed – that is, something for which the inspector would be blameless – then surely any fair-minded person would apologize for their actions and promptly remove their offensive post.
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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.
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My dad was born on January 15, 1898. Yesterday would have been his 114th birthday. To my considerable surprise, he died in 1983. Up until about 1980, I really expected him to make it to 100.

For one thing, he was never really sick. For another, he was still doing physically demanding labor even as he was turning 80.

About six months before his 80th birthday, I was vacationing in Ireland, both touring and visiting with family. One Sunday, my cousin Denis introduced me to a few of my father’s contemporaries who were hanging outside church after Mass,smoking and joking. Pointing to the Yank, Denis asked my dad’s friend and cousin Cormac McFadden if he knew who “that fellow there is.”

He hadn’t “a clue” and Denis told him “That’s Denis’s son, Joe!”
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