E & O Insurance

Originally Posted By: psissler
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Hi all,


Just a quick question. Being new to the game I was wondering if any of you could give me some insight on the type and amount of insurance to carry for the business. It is not required here in CA, but being a NACHI member I would like to keep in good standing in the organization as well as cover my backside. One quote I just received was for $2500.00 per annum...that's more than my health, life, auto, and home insurance combined. Any suggestions or leads would be greatly appreciated. Thank you.

Patrick


Originally Posted By: jhagarty
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That sounds like a pretty good quote for E&O. Which company was it with.



Joseph Hagarty


HouseMaster / Main Line, PA
joseph.hagarty@housemaster.com
www.householdinspector.com

Phone: 610-399-9864
Fax : 610-399-9865

HouseMaster. Home inspections. Done right.

Originally Posted By: Blaine Wiley
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$2500 is a pretty good rate. Check FREA and Allen insurance, both have links from the NACHI page of benefits.


Carry enough to cover your aSSets.


Originally Posted By: bemelander
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I’m With Allen and $2500.00 is in the neighborhood.


Bill



Anchor Home Inspections


bill@anchorinspections.com

Originally Posted By: sspradling
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Check with State Farm. They offer E&O and General Liablility for alot less than FREA or Allen.


Stu


Originally Posted By: clawrenson
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While on the topic of E&O - any comments - “pros or cons” from a “heads-up” perspective about experience with FREA. FREA is offering insurance to Canadian inspectors - but many questions - very few answers.


Are they good a defending/resolving claims - or do they pay out at the first opportunity?

Thanks in advance!

Claude in Canada


--
Ontario Home Inspections Inc.

Originally Posted By: Chris Butler
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I think we do a pretty good job but I’m a little biased.


In regards to Canada… as I am the one that set-up the program… I have most of the answers that you are looking for. And if I don’t have them I will get them for you. I was up in Toronto in November at CAPHI answering the same issues that you will probably bring up to the 175 inspectors in my presentation/question & answer period. So fire away Claude.


key highlights - it is a Canadian insurance company that the policy is with and we are licensed through our agent in Mississauga, ON. to write in all provinces except Quebec. Other than St. Paul we are the only carrier willing to take on Home Inspectors in Canada. Heck, coming in and bailing out Encon on September 1,2003 didn’t even have to happen, but we did and it allowed all of those that expired on 9-1-2003 to get retro coverage at no additional cost for two years.


Gentleman, make sure the policy you get with State Farm has higher limits than $100,000 - that is the limit I continue to see when they sign someone up for a GL policy and add the E&O as a rider.


You get what you pay for.


Sincerely,


Chris Butler


Director Of Membership


800-882-4410 ext. 104


cbutler@frea.com


Originally Posted By: clawrenson
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Thank you Chris for your response. No ill-will intended, just requesting simple experiences of others that are familiar with FREA over the years. I posted the question to solicit information. Some “FREA insured” members in Canada are simply concerned. Several have already indicated they contacted you and waiting to see the actual policy and wording.


I was insured with ENCON for a number of years and was less than pleased with their plan. I can honestly say that I like the approach of offering several different levels of policy depending on the one that best suits the inspector. ENCON's approach was more of a "one size fits all" policy that insured inspectors on the higher end of the spectrum.

So thanks for your quick response.


--
Ontario Home Inspections Inc.

Originally Posted By: Chris Butler
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No ill-will intended - sometimes the problem with e-mails - very sterile and unlively. The policies have gone out this week. As they were held up in the legal department for wwaaaaayyyy to long. This is the place as is another site for feedback from the front-line guys and girls and I cannot agree more than to ask your peers for advice on us. Heck, call Bob at Allen Insurance and ask him about us.


Have a great weekend!


Chris


Originally Posted By: clawrenson
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Once again thank you for providing a response. Sincerely it is greatly appreciated.


Regards, Claude


--
Ontario Home Inspections Inc.

Originally Posted By: sspradling
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Chris,


The policy I was able to purchase has 500k in coverage for 1440/year. I opted for a fairly high deductible (2500), but that’s still a fair deal.


Stu


Originally Posted By: psissler
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Thank you all very much for your input, insight and suggestions. They are all very appreciated.


Originally Posted By: Chris Butler
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Stuart,


I couldn’t agree with you more.


That is a great deal and probably attached to your other insurance policies with your State Farm Agent.


Thanks for the feedback.


Have a great year!


Sincerely,


Chris Butler


Originally Posted By: dsmith1
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Chris,


Why is it that you are not writing insurance in Quebec?


Originally Posted By: Chris Butler
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massive and numerous losses to the tune of a 360% loss ratio.


That is why Encon dropped the program for CAPHI.


And that is why no one is willing to write in Quebec for any carrier.


Originally Posted By: rsummers
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Chris will FREA ever offer E&O on a per-Inspection bases. I know that there are a lot of Inspectors that don’t carry E&O that would.


Originally Posted By: Chris Butler
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Dear Mr. Summers,


We do not offer this type of coverage. And I do not see any carrier on the horizon offering this type of coverage. Honestly, they just don’t make any money this way. That is why no one offers it.


Sincerely,



Chris Butler


(former) Director of Membership @ FREA

Originally Posted By: gbeaumont
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Hi Chris,


can you please explain to us why errors and omissions insurance for home inspectors is so bloody expensive, I think all about members would like to see a breakdown of insurance costs relative to the claims made.

Could you explain to us the ratios of claims, for example which areas of the property are having the most claims made over them ? what are the typical payouts ? either in terms of settlement or settlement and costs in defending such an action.

It would be nice to know why our insurances are so high, relative to the cost of other areas of insurance, I know that all insurances are based on actuarial tables, could you explain without divulging any trade secrets the liabilities that our insurers are under.

And also give advice to us as to how our members can significantly reduce their liabilities is there anything that we as an organization can do to help to members in this area.

Regards

Gerry


--
Gerry Beaumont
NACHI Education Committee
e-mail : education@nachi.org
NACHI phone 484-429-5466

Inspection Depot Education
gbeaumont@inspectiondepot.com

"Education is a journey, not a destination"

Originally Posted By: gsutterfield
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Gerry


I thought that was what the survey was for . What ever happened to the results ?


Originally Posted By: Chris Butler
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Gerry,


without divulging trade information that is proprietary, I can answer you this. Most claims come from the following four areas - Structural - 32%, Roofs - 18%, water penetration - 12% and termite - 8%. If these areas could be improved on - great! I really think that claims would go down if these areas were improved upon. I don’t think rates would follow though - considering the “hard” market mentality of the industry still and more importantly the lack (from a carrier’s standpoint) to insure a very high risk industry. But so you and others know - 70% of the claims we get are frivolous and 50% of those the HI denoted and referred the problem to an expert. Only to have the Homeowner sue you anyway. The other huge issue is the follow-up that a homeowner gets from the HI after the inspection is done. Many cases could have been avoided if the HI would have called back the homeowner and come to a resolution on an issue. We see claims that could have been avoided if the HI would have just simply returned a phone call.


I hope this helps, as I am not a liberty to share a carrier’s actuarial numbers as they are not mine to give out. Since we are really ultimately the customer with many members.


Keep up the great posts Gerry, enjoy your wine tonight.


Sincerely,



Chris Butler


(former) Director of Membership @ FREA