joe ferry

Is E & O Insurance A Waste Of Money?

Home Inspectors frequently ask me if having E & O Insurance is “worth it.” The unspoken subtext of the question, of course, is “Hey, if I never have a claim, haven’t I wasted my money?”

I guess that the answer would be “Yes”, if you felt the same way about any other line of insurance. If you never have an auto accident, never have a health issue, never have a house fire, never lose time from work due to sickness, have you wasted the money you spent on auto, health, homeowners and disability insurance?

The problem that I think that home inspectors have with legacy E & O insurers is that they don’t really trust them to do the right thing. And with some considerable justification.

I’m currently representing an Arizona inspector in a multi-party claim: the seller, a seventy-something woman, the real estate broker, a very successful entrepreneur and the inspector. The claimants are a real estate lawyer and his wife.

The lawyer-claimant wrote the Mother of All Demand Letters, a real magillah, fourteen pages, that sought $150,000 in damages. My response, according to counsel for the other defendants, “really infuriated him.”

Well, good, I thought. My fastball has not lost any of its velocity.
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New Negotiation Rules for Home Inspectors!

New Negotiation Rules for Home InspectorsCan anyone alter a contract even if they aren’t the company that drew it up? Absolutely.

What if a client and/or his attorney wants to remove the arbitration clause or statute of limitation clause from your home inspector pre-inspection agreement? Is this worthwhile to you and can you use the omission of these clauses to your advantage?

Joe Ferry answers these pressing questions in this week’s ClaimsAcademy video blog below. (more…)

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Brand X Home Inspector Insurance Companies Hazardous to Your Wealth

Tip 7 - Brand X Insurance Companies 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.

In the real-world home inspection industry, Brand X Insurance companies are the ones that can cost you a small fortune. Why? As I discussed in another ClaimsAcademy report, most home inspection insurance companies have the highest instincts of self-preservation and are at all times trying to settle a claim on their most favorable terms, not yours.
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Why You Should Follow the Skeptic’s Creed on Seller’s Disclosures

Tip #39 - Skeptic's Creed on Seller's DisclosuresA Massachusetts home inspector recently asked me if he could rely on the information posted in the seller’s disclosures or responses provided by the seller or the seller’s representative to specific questions about the property.

The easy answer to that question is such: If seller’s disclosures were reliable, there would be no need for home inspections. And these seller’s disclosures are unreliable for various reasons, many which are completely unrelated to any skulduggery on the seller’s part.

Although, as I illustrate in this week’s video blog, sellers will oftentimes actively conceal material defects, and home inspectors need to realize that when locked doors prevent access to critical areas or furniture seems oddly out of place, what seems amiss is usually…amiss.

I provide an example on this topic and profess why you should follow the “Skeptic’s Creed” in this week’s video blog.

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Claims on Concealed Issues: Why Didn’t You Take The House Apart?

Tip #38 - Concealed Home Inspection ClaimsA California home inspector recently contacted me about about a claim one of his prior clients was lodging against his former inspection company – the company that conducted the inspection in question.

This firm is exceedingly risk averse – so much so that it gas a standard practice of settling meritless claims at a moment’s notice. It’s a SOP (standard of practice) that I thoroughly discourage.

This claim in question dealt with an issue that was concealed at the time of the home inspection. “But why didn’t the home inspector dig up the kitchen flooring to find leakage in the sewer pipes?” (I asked this tongue firmly planted in check).

This week’s video blog looks at the prototypical concealed claim and why home inspection firms can’t make a practice of caving in to these complaints in the means of “customer service.”
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Stop Refunding Home Inspection Fees

Keep Your Hands in Your PocketsRefunding fees to every unhappy client is a revenue-crippling business model.

You are a home inspector, not a psychic. You can’t predict the future. So, when a monsoon hits your area six months after an inspection and a client resurfaces to complain about water intrusion through the siding, you need to ask yourself this question.

“Is my client unhappy with me and my inspection or is he dissatisfied with the result? And if the result has nothing to do with the quality of my inspection, why am I refunding his fees?”

I examine this issue in more detail in this week’s ClaimsAcademy video blog.
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Don’t Just Rate It, State It in Home Inspection Report!

Don't Just Rate It, State It in Home Inspection ReportWhat home inspection report methodology works best – narratives or checklists? Many home inspectors have varying views on this issue, but I provide a logical assessment in support of one of these methods from a legal perspective.

What method keeps your business safe? What method is more likely to safeguard you from reckless clients and their meritless claims? I analyze each method and their pros and cons in this week’s ClaimsAcademy video blog below.
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Karma is Hell

“What goes around, comes around” is a popular expression where I come from. It is a celebration of comeuppance, the schadenfreude one feels when, every so often, some bad deeds do not go unpunished.

About fifteen months ago, one of my ClaimIntercept™ subscribers had gotten a demand letter from someone for whom he had performed a home inspection. The claim was prototypical of a home inspection claim in that it had no merit as to the home inspector and very likely none to either of the other targets, the seller of the home and the listing agent.

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Inspection Agreements: Is There Anything They Can’t Do?

When home inspectors contact me to squash a claim, there are three documents that I always ask for: All correspondence with the claimant, the Inspection Report and the Inspector’s Inspection Agreement. These documents essentially constitute the “claim file” and invariably provide a torrent of reasons why the claim will fail.

After having sucessfully dispatched over 300 home inspection claims since 2006, I never expect a claim to have any merit and my expectations are never dashed. Of course, claimants and their attorneys, by and large, do not regard the mere fact that a claim has no legitimate predicate as any obstacle to making it. Indeed, their most frequently and fervently expressed desire is that the inspector “turn [the claim] over to your insurance company.”

And who can blame them? After all, most insurance companies operating in the home inspector professional liability field do not regard the mere fact that a claim has no legitimate predicate as any obstacle to throwing money at it. As long as the amount does not exceed the insured’s deductible, that is.
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