Need some opinions on E&O.
I’ve been looking at “pay per inspection” and monthly.
What are some of your experiences and who who you recommend?
Thanks for your time,
Tim
I am definitely not and attorney and this is definitely not legal advice. These are simply my observations and experiences concerning E&O insurance.
I am also a Real Estate Appraiser and have been sued. My experiences are when the Plaintiffs Attorney files a complaint, the first thing they want is the E&O policy limits. I had changed E&O providers one year and opted to not carry the prior bad acts coverage. The first policy was a “claims-made policy”. The appraisal that they were attempting to sue over occurred during the enforcement of the first policy which was no longer viable. I forwarded this information along to the plaintiffs attorney and then followed up with a phone call. He stated that he had no interest in pursuing the case as there was no insurance policy to go after and thus no money. That case went bye bye.
I had a similar case happen shortly thereafter. The first thing they wanted was E&O limits. Sorry, No E&O coverage for that period. That case went bye bye.
Now in Florida your Homestead (house) is protected from a lawsuit so they can’t take your home. This is different in different States so know the law.
Depending on what your other assets are, determines if you are worth pursuing in a lawyers eyes. Remember, they sue for money. If there is no money, in my experience, they do not have a dog in the fight.
I’m not saying that not carrying E&O is a good idea. All I’m saying is that in my experience, it has taken a huge target made of money off my back.
Of course, the Plaintiff can attempt to sue you themselves in small claims court. Depending on how pissed they are and how tenacious they are.
I personally have not carried E&O for my Home Inspection business. I put what I would pay for the premium in a savings account and hope that if I ever get sued, that the years of premium savings might be adequate for a settlement if things ever got that far.
Also, if you ever do get sued and your E&O settles your case or you lose in court, there is an excellent chance that your E&O provider will either drop you, or raise your premiums substantially. All things to consider.
I am definitely not and attorney and this is definitely not legal advice. These are simply my observations and experiences concerning E&O insurance.
I am also a Real Estate Appraiser and have been sued. My experiences are when the Plaintiffs Attorney files a complaint, the first thing they want is the E&O policy limits. I had changed E&O providers one year and opted to not carry the prior bad acts coverage. The first policy was a “claims-made policy”. The appraisal that they were attempting to sue over occurred during the enforcement of the first policy which was no longer viable. I forwarded this information along to the plaintiffs attorney and then followed up with a phone call. He stated that he had no interest in pursuing the case as there was no insurance policy to go after and thus no money. That case went bye bye.
I had a similar case happen shortly thereafter. The first thing they wanted was E&O limits. Sorry, No E&O coverage for that period. That case went bye bye.
Now in Florida your Homestead (house) is protected from a lawsuit so they can’t take your home. This is different in different States so know the law.
Depending on what your other assets are, determines if you are worth pursuing in a lawyers eyes. Remember, they sue for money. If there is no money, in my experience, they do not have a dog in the fight.
I’m not saying that not carrying E&O is a good idea. All I’m saying is that in my experience, it has taken a huge target made of money off my back.
Of course, the Plaintiff can attempt to sue you themselves in small claims court. Depending on how pissed they are and how tenacious they are.
I personally have not carried E&O for my Home Inspection business. I put what I would pay for the premium in a savings account and hope that if I ever get sued, that the years of premium savings might be adequate for a settlement if things ever got that far.
Also, if you ever do get sued and your E&O settles your case or you lose in court, there is an excellent chance that your E&O provider will either drop you, or raise your premiums substantially. All things to consider.
That is all food for thought. Unfortunately, I live in the sue happy state of California.
Although not required, id hate to lose my truck.
I love the idea of Saving the premiums.
Thanks for your info.
Check to see if your truck (main mode of transportation) is shielded from a lawsuit in CA. In Florida your house and main mode of transportation are safe. Probably not in CA though.
Perhaps the InterNACHI legal counsel can chime in on this topic and the prior discussion on this thread?
We have a legal counsel?! This site rocks.
Ya, looks like its all fair game. I thought creating an S Corp would shield me
from those types of things.
Simple: Put the assets you want to protect in one entity, and your inspection business in another. I trust your inspection business is a corporation or LLC… yes?
I sleep a lot better knowing I have E & O, LLC and a good agreement. Even with all three I occasionally wake up in a cold sweat.
Insurance is a great asset protection tool. If you want insurance, I recommend http://www.nachi.org/insurance
Tim, feel free to give me a call when you can and I can help answer some of your questions. I’m traveling today for a conference feel free to try me the next few days on my cell.