linkedin

Cooling Off a Fraudulent Home Inspection Claim

The number one complaint that I receive from home inspectors is that insurance companies simply cave in and pay claimants even when the home inspector has done nothing wrong. I used to think that this was just general professional bellyaching that had no basis in reality but that was before personally squashing hundreds of claims that were absolutely ridiculous.

A lot of home inspectors have rather large deductibles on their Professional Liability Insurance [E & O] policies, up to $5,000 in some cases. And I can understand why they do that. For one thing, the higher the deductible, the lower the premium. For another, they just don’t believe that they are ever going to be called upon to respond to a claim from one of their clients.

This belief is based on the fact that they have a lot of confidence in their professional skills, a belief that is entirely justified in my experience. The problem is that you do not have to conduct a negligent inspection to be accused of having done so. You merely have to have a client who thinks that you did. And unfortunately, those sorts of clients abound.
(more…)

(more...)

The Broken Heat Pump

Since 2007 I have been providing home inspector training all over the country about legal issues that impact their practice and the tools and techniques that they can implement in their own businesses to reduce their likelihood of becoming victimized by their ungrateful clientele.

Since I began giving the seminar, I have also been asked by hundreds of home inspectors to respond to claims made by their clients and their clients’ attorneys. As of this writing, I am batting .970 at terminating those claims with prejudice.

I am not surprised by that statistic because the majority of home inspection claims have no merit. And by majority, I mean the overwhelming majority. In my personal experience, meritless claims represent about 99.999 percent of all claims against home inspectors. In other words, virtually all claims against home inspectors have absolutely no merit.
(more…)

(more...)

Anchors Aweigh: The Limitation of Liability Effect

Regular readers know that I am dead set against refunding inspection fees to unhappy clients. Ever.

I have written extensively elsewhere on this site as to why this is a bad idea and a terrible habit to cultivate. Yet inspectors continue to do it.

Why? On my daily 4 mile sortie through my leafy neighborhood the other day, I pondered that very vexing riddle.

And I concluded that it most likely stems from the fact that most inspectors are in thrall of the Limitation of Liability Clauses in their pre-inspection agreements. Most of these clauses limit the inspector’s liability to the cost of the inspection, say, $400.00. This number, thus, becomes a subconscious “anchor” for the inspector.
(more…)

(more...)

The Costs of Defending a Home Inspector Lawsuit (2 of 2)

One of the more unpleasant experiences in life is answering your door and finding the county sheriff or one of his deputies on your doorstep asking if you are one of the defendants named in the copy of the Complaint that he is holding, a Complaint that has been filed by one of your home inspection clients who is claiming that you failed to uncover certain defects during your inspection and that that lapse on your part is now costing him a lot of money to rectify.

This is especially disturbing when it is the first inkling that you have that this particular client had any beef with you whatsoever. This is, perhaps, the only time when no news is not good news. As I have written elsewhere on this website, while it is still possible for me to persuade the plaintiff’s attorney to voluntarily dismiss you from the suit, it is less likely when there has been a substantial calorie-burn on the attorney’s part. And it goes without saying, I trust, that it is impossible to do so once your  home inspector insurance company has appointed defense counsel because their financial incentives are contra.
(more…)

(more...)

When Should You Report A Home Inspection Claim?

This blog generates a lot of email from home inspectors. Recently, a home inspector wrote that he had been given a heads-up from a real estate agent with whom he has an active business relationship that a former client was getting ready to initiate the claim process against everyone involved in the transaction. Though he had not heard anything directly from the former client, the agent told him that the claim concerned cracks in front brick wall and that a structural engineer had opined that the house is three inches off level and – altogether now! – “the home inspector should have reported” a tiny caulk bead at the corner mortar joint.

So the inspector stopped by the home and took photos of the “cracks” which do not appear on the original inspection photos. Moreover, the inspection took place more than a year ago and the inspection agreement has a one-year limitation period on claims. Case closed, right?
(more…)

(more...)

Disclaimers, Will They Protect You?

ASHI – NE Chapter Education Chairman, Bob Mulloy, in a recent note wrote:

Joe –

I am preparing a future seminar for ASHI, titled “Disclaimers, Will They Protect You?” 

I have numerous sample disclaimers for systems and components that I plan to present for discussion. 

Let me ask you some questions:

How would you define the difference between an Exclusion and a Disclaimer?
(more…)

(more...)

The Costs of Defending a Home Inspection Lawsuit (1 of 2)

As a frequent contributor to online inspection forums, I regularly get private email from professional home inspectors seeking my opinion on legal matters. Recently a reader wrote:

“Joseph, So, absent an E&O home inspector insurance policy, inspectors are exposed to the realities of defending a claim, which in 98% of the cases you have seen, are without merit. What do you estimate the cost to the inspector are to defend themselves, considering court costs, attorney, depositions, etc?”

Fortunately, not every claim involves a lawsuit. Most claims begin life as a complaint from a disappointed client. And most experienced business persons have had to deal with customer complaints at one time or another in their careers, and have no problem whatsoever rectifying a legitimate complaint to the customer’s satisfaction.
(more…)

(more...)

When Attorneys Amend Your Agreement

One of my home inspector clients contacted me the other day for advice on what to do about a prospect whose attorney had lined out in its entirety the portion of his Inspection Agreement that a. required binding arbitration and b. required claims to be brought within one-year of the inspection.

In his transmittal email to the inspector’s prospect, the attorney wrote the following: “The stuff below that I red-lined should be removed. I don’t have a problem for him not to be responsible for stuff he does not inspect. Any questions let me know.” Italics mine.

And I, for my part, do not have a problem with this lawyer lining out those two items, especially if the inspector can exact a higher inspection fee as a result. Here’s why.
(more…)

(more...)

The Irish Patient

The vast majority of my friends firmly believe that I am “lucky”. Not just lucky, but unusually so. I believe it, myself.

How many kids grow up with six older brothers to guide them along life’s journey and to straighten out wannabe tough guys? Have loving parents possessed of moral compasses that unerringly pointed True North and core beliefs in an immigrant ethos that valued hard work and resolute tenacity?

In adolescence, when we were not playing ball, my friends and I passed the time playing cards – pinochle, hearts, poker. To my friends, it seemed as though I was always shooting the moon – taking every point – which is locally known as “pulling a schnitzer”, or filling inside straights. It seemed that way to me, too.

Then I got drafted into the Army during war time, went to OCS and got commissioned as a Second Lieutenant in the Field Artillery. Half of my class went to Vietnam, the other half went to Korea. I went to Korea. We had a month’s leave before reporting for duty but I decided to report early and ended up with a relatively cushy assignment as Executive Officer of a Headquarters Company in a Support Command. There wasn’t an artillery piece within ten thousand meters. My CO and I were the only two combat arms officers in the entire command.
(more…)

(more...)

Mr. Home Inspector, Will You Pay For My Renovation (3 of 3)

After getting an indefinite extension of time to respond to the Complaint and, thus, eliminating any possibility of a default, I wrote to the inspector insurance company to timely advise it of the claim.

I enclosed a complete copy of the Complaint, a copy of my letter to the Plaintiffs’ attorney that delineated all the defenses to the Complaint together with a cover memorandum that explained that the attorney wanted time to discuss the matter with his clients and expressed my professional belief that the plaintiffs would voluntarily dismiss the inspector from the lawsuit.

I also suggested to the claims manager that the insurer refrain from appointing counsel for the time being to give the seed I had planted in the plaintiffs’ attorney’s mind time to germinate. In my experience, decisions by opposing counsel to do the right thing can take up to a month during which time you generally want to leave them alone – no sudden moves – with a gentle status inquiry every week or so.
(more…)

(more...)