HI Lawsuits...Fact or Fiction?

21

That was my point, exactly. Without knowing the raw data, any claim is as valid (or not valid) as another.

I think that the industry has matured enough to the point where we can now require from our vendors the raw statistical data to back up their claims.

We are all aware of how certain special interests further their own personal agendas through legislation that is designed to “protect the consumer” when the consumer, himself, is oblivious to the need for it. Consumers have not involved themselves in these bills to any extent at all, which would seem to contradict the existence of very many law suits either filed or pending.

Perhaps it is time to ask those who are in the business of selling us the protection to better prove the validity of the actual threat.

How many home inspectors were sued in a circuit court where a judgment was rendered by a judge or jury in 2005?

Without the answer to this question, the following claims cannot be validated:

(1) My E&O insurance policy is necessary.
(2) States should mandate E&O to be certain that the consumer is protected.
(3) My software can prevent a law suit.
(4) This particular SOP is better than that SOP in protecting home inspectors who are taken to court.

22

Were they bad inspectors who should have been put out of business?

Those of us who fight state control over home inspectors believe that the market is a better judge…than a state politician…as to who should be in business and who should not.

23

Everyone write this date down. I totally agree with Jim on this point.

Perhaps another avenue would be to collect data from the “expert witnesses” who tend to support the insurance carriers claims.

24

**"Perhaps it is different in the US, but in Canada, small claims court is where lots of action takes place. In addition, the actions of small claims court should be counted, in the stats. I have seen as many as 1 every other week go to court in my county alone. That equates to quite a number if you look at the “big” picture. **

**BTW: that also can amount to a claim in the range of $1,000 to $10,000. For some newbies that can be a significant loss in a business start-up. Now add onto that those bought out by the inspector. **

I know of two home inspector that have just shut their doors in the past few months because of legal claims"

With all due respect, Claude, with no supporting evidence this and statements like this are just romours and rumours of rumours. I have heard that one of the local representatives of C.A.P.H.I. has been in court several times this year. However I have no proof so I do not spread this story around to the public as it is damaging to our profession.

For those of you in The United States, we have a group up here in Canada who, with the advantage of Government funding ( amongst others) have set up a system of defacto licensing for home inspectors. They have done this based on the rumour that a great many inspectors have ended up in court for doing poor inspections. They have invested a great deal of time advertising this “fact” to the public to justify their programme.

Inspectors in Canada have asked for proof of this claim and no proof has been provided except a few references to some ten year old data compiled long before our industry began it’s growth spurt of a few years ago. So a pall has been thrown over our industry without proof ( Hmmm sounds like global warming :mrgreen: ) when the truth is that there is no need of this programme. It would be very interesting to see some actual facts and figures on this issue that are relevant, unbiased and current.

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25

Knowledge replaces fear.

Thus, those controlling and marketing with fear will withhold as much of the knowledge as they can.

It is inherent upon all of us to seek real answers to the real questions in this regard, and stop depending upon and being guided by the hyperbole.

Anyone who is unable to tell me exactly how many have been sued is unqualified to tell me how many will be sued.

26

Can’t argue that.

27

Off the top of my head with no research or taking time away from doing intense study of my Playboy collection - in the past 3 years that I can immediately remember in the Kansas City, Lawrence Kansas, Lake Ozark, Missouri, Springfield, Missouri, Wichita, Kansas and St. Louis area - I’ve been hired for expert witness or investigative work in the following lawsuits involving Home Inspectors or engineers doing home inspections:

St. Louis, MO - 2
Columbia, MO - 1
Springfield, MO - 1
Lake Ozark, MO - 2
Lawrence, KS - 2
Topeka, KS - 1
Witchita, KS - 3
Kansas City MO or KS Metroplex - 19

Thats 31 that come to mind ASAP & I’m just one guy in Kansas City

Most ended up being frivilous

Often there was a Realtor or Seller involved in the suit

Most get settled out with gag orders 24-48 hours prior to final court date.

The inspectors ended up winning or being dismissed from the suit in 6 cases

Even when the inspector won, it cost him/her several thousand in lost wages or defending themselves or their deductible, etc

Bottom Line - Do what feels right for you personally - manage your own risk

Lastly - Its not personal, its just business - Be Empathetic, Not Sympathetic

Remember many sellers, builders, & agents lie through there teeth to get someone else to pay for their problems - don’t let that be you

28

That quote is as useless as an ashtray on a motorcycle.

Given we already know that anyone can be sued for anything, we don’t know how many will be sued. Having knowledge of past claims is not an indication of the future as to how many will be sued.

However I do know from a Canadian point of view that back around 1994 when E&O was being offered pretty much for the first time to many in the Cdn industry the number of suits was high, but by 202, the number of suits had levelled of substantially. However without disclosure from the insurance industry its anyones guess as to how many have been sued and how many are currently open.

Just my experience but then its only a Canadian point of view based on documened facts.

29

That quote is as useless as an ashtray on a motorcycle.

Given we already know that anyone can be sued for anything, we don’t know how many will be sued. Having knowledge of past claims is not an indication of the future as to how many will be sued.

However I do know from a Canadian point of view that back around 1994 when E&O was being offered pretty much for the first time to many in the Cdn industry the number of suits was high, but by 202, the number of suits had levelled of substantially. However without disclosure from the insurance industry its anyones guess as to how many have been sued and how many are currently open.

Just my experience but then its only a Canadian point of view based on documened facts.

30

:shock: That’s terrible numbers when comparing it to the number of inspectors who belong to an association. I’m assuming that you are not the only “expert witness” in town. It also shoots the original generalization of 10, 20, or 30 in the U.S. all to hell when you have 19 from one little area.

Thanks for the info, Dan.

31

For me to say to you that “the ASHI SOP is lacking in protecting an inspector” I would need to know the following:

  1. How many inspectors using that SOP were sued in a circuit court (not small claims court) and had a judgment rendered by a judge or jury.

  2. Of those in (1), above, how many lost their suit.

  3. Of those who lost their suit, how many lost due to actual negligence and how many lost due to a loophole or other fallacy not addressed by the ASHI SOP.

Without this information, not only do I NOT know if the SOP is really ineffective, but I also have not an inkling of what to do to make it more effective.

Anything that is spoken or published against an SOP…or in favor of one SOP or another…without this data is nothing more than a hyperbolic sales presentation.

Very similar to those hawking home inspection legislation as an “answer” to a problem that they have yet to quantify. From history, we know that home inspectors in Illinois went from 450 (before licensing) to over 3,500 (after licensing). We know that in New York, since licensing took effect on 1 Jan, over 600 new licensed inspectors have been put on the streets in that state from just one school.

From this raw data, we know licensing laws and increased competion/decreased fees are related in most cases. There can be and possibly have been isolated exceptions, but our quantified observances give us the authority to predict the likelihood of such an event.

So the past history does help in predicting future activities, Ray. If they didn’t, insurance companies would be ignoring such data instead of compiling it.

32

We don’t know and you don’t know.

We don’t know and we don’t know.

We don’t know and you don’t know.

Without this information we don’t know if the SOP is effective.

Yes and you are the salesman wanting to convince us that you speak with factual information, which we know you don’t because we are just as much clueless as you. Well not quite I have some numbers from Canada that the insurers provided.

Okay, and what is the conclusion, that more inspectors are not being sued because of licencing or vice versa?

Raw data? What raw data? Speculation, guessing? Authority to predict? What? How can you predict with authority when this is all speculative on your part?

You haven’t proved it does, you have only convinced yourself and maybe a few others. :frowning:

33

Very good. Thanks for the sampling. Although, since you said most get settled before court date, they do not qualify as actual suits settled in court by a judge or jury, so they don’t directly rate to the topic. Still, let’s look at this.

Here are two states…Kansas and Missouri.

The data collected over a three year period.

So…let’s be conservative and say that the two states employ a total of 500 home inspectors…(I think it may be two or three times that much, but let’s go low)…and they average a paltry 20 inspections per year (another very low number).

We have a very, very conservative number of 30,000 home inspections resulting in 31 lawsuits…25 of which the inspector lost. Less than one-tenth of one percent.

From that, would anyone say that 1/3 of all home inspectors will be sued?

Frankly, observing that the busiest multi-inspector firm in St. Louis conducts 90 minute inspections with five page checklists…I would expect the number of legitimate lawsuits to be much higher and…frankly, again…am disappointed that they are not.

34

Wow. Disappointing numbers indeed. According to this one out of every thousand inspections will result in a law suit. I don’t like the odds.

35

Read Dan’s quote, John. Most were settled before trial. Not a part of the topic.

Without a trial, no judgment on the adequacy of the SOP or inspection report can be rendered.

I can live with one out of a thousand, though, considering that that one inspection firm in St. Louis has four inspectors cranking out 16 ninety minute inspections per day with a checklist report.

36

James, you appear to be being very selective as to what constitutes a case against a home inspector, in all industries and professions most claims are settled out of court by mutual agreement (in many cases solely to avoid the outrageous costs of defence) however these cases still cost inspectors and their E&O carriers many thousands of dollars. I have personally been involved in 5 litigation actions (None against myself) and in all cases none of them got as far as a trial, in all cases the legal costs were over $10,000. In one case I was deposed twice and they were going for a third go around. The legal “profession” appear to be a lot more interested in their billables than in common sense and justice.

We are not going to change that anytime soon and that is what is driving up our E&O costs.

Regards

Gerry

37

I thought the topic was dead once we established and agreed that the SOP meant diddly squat nothing in negligence cases.

You keep harping on these SOP’s. Why?

I would be very very uncomfortable knowing that at least one out of every thousand inspections leads to a suit or even a settlement before it goes to court.

Maybe if I had your money, it wouldn’t. :smiley:

Still a good subject worthy of discussion. Just wish you would get off this SOP kick.

38

In every forum of this message board, there is a post by an inspector who intimates that he performs or documents his inspection in some manner as to preclude being sued. This performance and documentation directly relates to the SOP, which is why I refer to it.

If, indeed, we are at the tremendous risk that some think we are (and others pander to by selling their wares) we should validate this with actual reliable data.

Perhaps they are right. Maybe I should have a million dollar E&O policy and publish 130 pages of disclaimers with my thrity page inspection report. Perhaps they are wrong. Only with the actual raw data will any of us know for sure.

You are the Executive Director of the largest home inspection association in the world. You are in direct contact with all the experts who know everything about our industry. You speak throughout the country on the home inspection industry…past, present and future. How many inspectors were sued in 2005 in a circuit court (not a small claims court) and had a judgment rendered against them by a judge or jury?

39

Gerry,

I agree with you that there is an issue regarding liability at the “settlement” level.

The reason I have excluded it from this conversation is that…at the settlement level…there is no defense. If you have E&O, you are going to settle whether you want to or not, whether you are guilty or not, and whether you have a good report, SOP, or not. This is a decision that is made entirely by your insurer and has no bearing on the actual case.

In out of court settlements, many times having E&O puts one at more of a disadvantage. Winning his case in court is not his option…it is his insurance company’s. Under that scenario, what difference does it make what insurance I buy, what software system I write my report with, or what SOP I use? It will never be tested.

That is why I eliminated settlements from this particular scenario for they would not be relevant.

40

Being an Executive Director or anything else has nothing to do with this thread. Some time ago NACHI started collecting these stats. You will have to contact Nick to see if he will release that information or even if he can.

In addition I do have some figures in front of me. Unfortunately it is privileged information and not available to every Tom Dick or Harry, that wants it- much in the same manner as the lawyer-client confidentiality agreement, the insurance industry operates under the same auspicies.

If you choose not to have E & O or endorse it based on your research, so be it. I sincerely hope that your or my assertions, conjecture, banter or whatever has any bearing or sways someone not to protect themselves, their livlihood or business based on our perceived percentages/numbers. Each and everyone one of us must do our own research and soul searching and do our own risk assessment/management analysis.

For some reason, I still feel that if the cost came down the number of insured would go up.