home inspection

A Tale Of Two Inspectors

Last November I spoke at a home inspection conference on the Left Coast. As almost always happens, two inspectors who were in attendance at that conference subsequently had claims two-and-a-half months later. Both inspectors informed me when they notified me of the claim that they had been at the conference, enjoyed my presentation very much and had enrolled in the ClaimIntercept™ program.

One inspector had enrolled immediately after the conference, the other one waited until after he had a claim to enroll. The first inspector was thrilled that he could just forward the demand letter to me for response and forget about it.

The second inspector was shocked, shocked to learn that I was not going to allow him to take advantage of me.
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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.
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A Deck Collapse, Now . . .

One of my inspector friends recently called me with some disturbing news. Both his former client and the client’s insurance company were suing him over an inspection that he had performed in July of 2008.

The inspection was pretty standard, a few issues but nothing not easily and inexpensively corrected. The property had a rear deck off of the first level which was original to the seventeen year-old home and the inspector described the deck construction as “average” with two-by-eight joists and “adequate” vertical support.

Unfortunately, the deck collapsed this past February under the sheer weight of ice and snow accumulation. The homeowner filed a claim, alleging some $57,000 in damages, against his homeowners insurance policy and his insurance company denied the claim for the most part, agreeing to pay only $10,000.
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Who Should Pay For Arbitrations?

After reading one of my archival posts on Arbitration, Connecticut home inspector Martin Greenberg wrote:

“Joe, I recently attended a CT Law course taught by an attorney. He indicated that the AAA has recently changed its practices and is now looking to the defendant for a substantial sum of money as the case initiates. He advised to specify arbitration using an attorney qualified to arbitrate and with related experience.

What is your opinion?

Martin”

I think that AAA may be feeling the economic pinch as much as the rest of us and must think that transferring the financial burden to defendants is just what the doctor ordered to gin up a slew of new arbitration matters by removing the financial disincentive to the filing of ludicrous claims.
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Is E & O Insurance A Waste Of Money? Part Deux

My recent post, Is E & O Insurance A Waste Of Money, prompted this comment from Arizona Home Inspector, Jeff Byfield:

Joe my question is, if you didn’t have insurance would you even be considered in these frivolous law suits that greedy people and unscrupulous attorneys pull you into? What can they really sue you for besides your ladder and a few tools, or is there more to this than what I’m thinking?

This is a question that comes up every time I present the Law and Disorder Seminar and every time I write about professional liability insurance.

Many inspectors believe that, if there is no pot of gold – insurance – at the end of the rainbow, claimants and their attorneys will simply fold their tents and go away. Problem solved. Unfortunately, as I have written extensively elsewhere on this site, lawsuits seldom end well for uninsured defendants and their uninsured status certainly does not immunize them from lawsuits.

While I have successfully persuaded over 500 claimants and their attorneys to abandon their claims, it was because I laid out compelling reasons for doing so bolstered by Force Ten levels of logic. They did not do that because the inspector had no insurance, they did it because I convinced them that they had no claim.

Some inspectors who have been following me for years and are familiar with my phenomenal success at terminating home inspection claims aborning have wondered to me what the point of having professional liability insurance is, if 97% of claims go away with a letter. Why, indeed?
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Elementary, My Dear Watson!

Around the first of the year, one of my home inspector training Law and Disorder Seminar graduates alerted me to a television show that had recently begun airing on HGTV. Coincidentally, I had actually been vaguely aware of the show from the torrent of threads appearing on home inspection message boards whose general consensus seemed to be that the show’s host was unfairly singling out home inspectors for special abuse for the crime of not having discovered defects that he was only able to discover through invasive and destructive investigation, a technique that, I hope it goes without saying, is way-hay-hay beyond the scope of a home inspection.

I didn’t pay the message board kvetching any mind but my friend seemed to think that this show would be an inestimable boon to my practice because it was basically telling viewers that if they were unhappy with their home, their home inspector was most likely the responsible party.

By then the show had been on for a while and since I had not noticed any meaningful uptick in the number of crackpot claims that home inspectors were asking me to neutralize, I figured that people were not taking the gratuitous criticism for anything beyond entertainment. But then the strangest thing happened. Shortly thereafter, I had lunch with a friend who is a very successful financial planner – a total layman – who was a fan of the show and he thought that it would be bad for my practice because it cast home inspectors in such a bad light.
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Myth # 2 The Limitation of Liability Clause Is the Greatest Thing Since Night Baseball

There is absolutely nothing that a home inspector likes better than limiting her liability. And there is nothing that limits a home inspector’s ability to make money more than clinging to this completely unnecessary clause that is way past its sell-by date.

Home inspectors love limitation of liability clauses – also known as exculpatory clauses – because, in the majority of US jurisdictions, they are routinely enforced on freedom-of-contract grounds and, thus, effectively put a cap on the inspector’s potential liability to her client for professional negligence. Indeed, every home inspector association and every home inspector franchisor actively encourage their members and franchisees to embrace this evolutionary holdover. And you would be hard pressed to find a home inspector forum whose contributors do not wax enthusiastic about the preternatural cleverness of their personal attorneys who counseled them to include such a clause in their pre-inspection agreements.

One problem with exculpatory clauses, of course, is that they also put a cap on the inspector’s earning potential. What sophisticated purchaser, in her right mind, would hire a professional home inspector who limited her liability? That’s a rhetorical question that answers itself. The sophisticated consumer will pay hundreds of dollars more to secure the services of an inspector who does not limit her liability – and makes the point in her marketing material that, unlike her lowball competition, she stands behind her inspection reports.
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Oy, Gevalt! These UIs Are Killing Me

One of the more annoying issues that I have to contend with on a weekly basis is the drill of having to jump through the hoops erected by the myriad of Brand X E and O insurance companies that home inspectors latch onto that seem to be designed to thwart my efforts to prevent them from committing suicide and taking the home inspector along for the ride.

I call them UIs [you eyes] because I have never heard of the vast majority of these companies and that was the term that we used in the military to refer to enemy units whose identity was unknown. They were “unidentifiable”. Hence the acronym “UI”.

An inspector out West, who is insured by one of these UIs, recently contacted me to respond to a claim being made by one of his clients over an inspection that he conducted.

It almost never rains where this inspection took place and the inspector noted that the ceiling of the home had recently been painted, thus, making it impossible to ascertain with any certainty whether there were any prior issues with the property’s roof. The inspector did note a number of other issues which his client used to exact substantial concessions from the seller.
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Avoid This Deadly Ménage Á Trois

At last Thursday’s home inspector training Law and Disorder Seminar in Wall Township, New Jersey, one of the inspectors in attendance was currently a defendant in a multi-defendant lawsuit. As the seminar wore on and I was recounting all the reasons that claims against home inspectors by their former clients never have any merit, this inspector asked why the attorney who had been appointed by his E and O insurance company for home inspectors to represent him in his lawsuit was not taking any of the steps that I was saying needed to be taken to terminate the matter in his favor.

For example, even though the inspector had a clause in his contract that required that any dispute arising from the inspection had to be adjudicated in arbitration, the lawyer never filed or evinced the slightest interest in filing a motion to dismiss the inspector from the suit on that ground. Instead, he answered the complaint which constitutes a de facto waiver of the clause. Moreover, even though the inspector had no liability – the alleged defect that was the gravamen of the plaintiff’s complaint had been concealed at the time of the inspection – the lawyer was sending unmistakable signals that he was fixing to fold his tent and cut the losses of his real client, the inspector’s professional liability insurer. Certainly, the insurance company’s continued patronage is more important financially to insurance defense counsel than a random individual insured-defendant.

That’s a scenario that is very familiar to this long-time observer of the inherent conflicts of interest that obtain in the ménage à trois, formed by the prototypical insurance defense contract, among the defense counsel, insurer and insured and the reason that I never sought insurance defense clients. Numerous conflict issues can arise in such relationships but the one that concerns inspectors the most is the unwillingness of both insurers and defense counsel to vigorously defend bogus claims, if the expense of doing so would eclipse the nuisance value of the case.
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Happy Independents’ Day

That headline is not a typo.

Other than summer jobs during high school and college, a stint helping my Uncle Sam prevent the Domino Theory from becoming the Domino Law, a cup of coffee at an insurance company after the service and a brief interlude at a major Philadelphia white-shoe law firm to learn the ropes of my new profession, I have always been self-employed. Coming, as I do, from a long line of Irish farmers who had to coax a hard-scrabble living from unforgiving ground and dicey, to say the least, weather, I suspect that working for “the Man” was very likely bred out of my genetic code multiple generations ago.
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