How Much Does it Cost to Defend a Home Inspection Claim?

Tip 36 - The Costs of Defending Home Inspection Lawsuit (Part 1)“What you do consider the costs to the home inspector for defending themselves against a meritless home inspection claim, considering court costs, attorney’s fees, depositions, and more?”

I received this question from a home inspector who was likely surveying the necessity of E&O insurance as a defense mechanism against the possibility of a claim and/or lawsuit brought against him for some frivolous reason.

Fortunately for home inspectors, not every claim becomes a lawsuit. Most claims, in fact, begin as a complaint from a disappointed client. If the complaint has merit, most professional business owners have the wherewithal and acumen to appease the client to his or her satisfaction.

The issue arises when the claim is not legitimate. And that’s normally the case.

How can you defend these claims? In the first installment of this two-part “cliffhanger” video, I reveal how most claims manifest and the claimant’s and his/her attorney’s motives in filing the claim.

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Follow-Up Home Inspectors: It’s a Different House!

Tip 27 - Follow-up Inspectors: It's a Different House!You walk into a house that had already been inspected. There’s glaring issues in the basement – a massive crack in the foundation plus some apparent moisture stains. You ask yourself, “How did the initial home inspector miss these easy-to-recognize issues?”

It’s a good question, one follow-up home inspectors don’t ask enough. They are too busy looking like the hero to their client while throwing a professional colleague under the bus.

Instead, follow-up home inspectors need to recognize they are inspecting an entirely different house. What questions should they ask themselves during the re-inspection? How should they proceed with detailing the defects?

I examine these issues in this week’s ClaimsAcademy video blog.
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All Home Inspector Insurance Companies Are NOT The Same

Myth 5: All Insurance Companies Not SameMold 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.

Yet, that story isn’t an outlier. Stories like this happen every day, as insurance companies many times would rather settle and get rid of the claim instead of fighting it.

Why is this bad news for many home inspectors? Watch the video above as I illustrate the issue and offer an easy resolution to a reoccurring problem.

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The Cost of Your Lose-Lose Proposition

Tip 37 - The Costs of Defending Home Inspection Lawsuit (Part 2)The county sheriff arrives on your doorstep. Your heart sinks. A home inspection client of yours is demanding you pay for the bad results that occurred months after your original inspection.

Your goal is too be dismissed from this massive claim – which includes you, the seller, the seller’s agent, the buyer’s agent, so on and so on – but that is increasingly difficult when there has already been a substantial calorie burn on the defense attorney’s part.

And it’s nearly impossible to be dismissed once your home inspection insurance company appoints legal counsel because its financial incentive is to settle the claim for your deductible (or offer it as part of the settlement) and walk away.

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Understand Your True Liability and Risk

Tip 25 - Understand Your True Liability and RiskMany home inspectors are SHOCKED to hear that their corporate entities (sub-chapter S or limited liability corporations) do not insulate them from personal liability for doing a negligent home inspection.

These home inspectors say that their attorneys told them about this protection when they formed their corporations. It’s simply not true.

When can a disgruntled client come after the corporation for restitution? When IS the corporation sheltered against charges? I go through the initial myth and more in this week’s video blog.
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Disclaimers Are Your Business’ Best Protection

I encourage home inspectors to utilize the proper use of disclaimers – and go into it in some considerablTip 24 - Disclaimers Are Home Inspectors Best Friende detail – during my Law and Disorder Seminar.

A knowledgeable home inspector knows that there are many issues concerning a home-buying decision that are NOT going to be uncovered during a home inspection. Unfortunately, your clients don’t understand this fact.

That very real disconnect is the reason why home inspectors should be incorporating disclaimers into their practice. I go through a few examples of proper disclaimer usage during this week’s video blog.
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The Typical Home Inspection Claim Runaround

Tip #42 - The Typical Home Inspection Runaround Claim RunaroundI’ve now been successfully defending home inspectors against meritless claims for a decade now, and with over 1,000 claims under my belt, I feel I’m qualified to describe the typical home inspection claim runaround competent home inspectors like yourself receive when dealing with an “issue” that really isn’t your “issue” at all.

I recently received a phone call from an inspector who was STILL dealing with an issue after two-plus years. The attorney representing him had, not surprisingly, been running up massive legal fees in the six figures without even the slightest desire to terminate the case. Why would he? His interests lied in his own billable hours driving fees as high as possible.
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Home Inspector Selfie! Take More Photos During Home Inspection

Tip 23 - Home Inspector SelfieHome inspectors – I’m sure you are familiar with the “selfie” mantra of today’s youth. In essence, they love taking photos. You should have the same passion during a home inspection. Take photos of each room in the house, appliances, HVAC units and more. Take far more photos than required or that you will even put into the inspection report.

Why is taking so many photographs important from a legal perspective? I walk you through the protective process and highlight a specific home inspector’s plight in this week’s video blog.
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Don’t Indulge Rage-Induced Home Sellers

Don't Indulge Rage-Induced Home SellersI’m starting to see a very disturbing trend developing between the home inspection industry and the real estate marketplace: non-client home sellers are bringing claims against home inspectors for the failure of their clients to follow through on the agreement of sale as a consequence of the home inspector’s findings.

Some of these frustrated sellers, desperately attempting to unload a home in a still slowly recovering housing market, vent their fury at the home inspector for a lost sale in entirely inappropriate ways.

How should you, the competent home inspector just fulfilling your professional duty, handle these angry home sellers when a filed complaint comes your way?

I go through how to squash these unreasonable requests in full force in this week’s video blog.
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