From Canadian figures
1998-2003 - Number of certificates 1014
Number of claims during same period 98
Average Severity $ 20,981
Frequency (claims/cert) 9.7%
Number of paid & closed 42
HOLY COW!!! That low?
That is, indeed, an amazing statistic. Less than 100 insurance settlements in a total six year period??? For an entire country???
That is absolutely incredible? That is much, much lower than I would have ever thought.
Law suits must be even less than that, as hard as that is to imagine, would they not?
All
This is one of the best discussions on this subject that has been on the BB is some time
Thanks
From my point of view the best way to avoid Lawsuits is to do a quality and complete inspection
Next is DO NOT publicly say what your insurance status is if you do not have to
Remember if the risk was real the insurance companies would leak out the information so they could make more sales – They would also start to jack up the rates
Wonder if we could get some information from similar professions like rates
rlb
Caveat
Since reports provided by the carriers were produced at different dates, results may slightly differ.
Note that the term 2002-2003 is not complete and takes into consideration 10.5 out of 12 months.
At the Toronto Confrence I asked Mr. Cohen (NACHI Attroney) if he thought it a good idea to advertise E&O coverage, and his answer was, no, fwiw.
John Bowman posted…
Yes, yes, yes! I think you are absolutely correct. Don’t forget the insurers would not be selling HI insurance if there was not a profit.
Lets face it insurance should not be any more than $1500 tops. It absolutely ludicrous to be paying anything over that in my opinion.
James, I don’t believe you can discount these area as they are very germain to the overall discussion. Bottom line even with a very small amount of legal cost ($10K) that would eat up the gross revenew from 4-5 home inspector E&O policies.
You are appearing to draw the shipping industry analogy where everthing after the Titanic looks good 
Regards
Gerry
But he wouldn’t have a leg to stand on Gerry. You have to admire his thinking though, if someone makes a plea agreement for second degree murder vice first degree before it gets to a trial and your case is not heard before a jury - it doesn’t count in his statistics.
Yea but who ever heard of a Home Inspector getting away with plea bargaining.
That only works for criminals not honest people trying to make a living .
Plea bargaining had nothing to do with it Roy. It was just another way of showing how the manipulation of statistics is being undertaken.
Gerry,
Keith has recently posted an item in another thread critical of NACHI’s SOP (which he states he has only recently read). Let’s use his post to illustrate my point.
He pointed out two specific parts of the SOP that he wants to change. Regardless of which parts they are…for it does not matter…let’s talk about the section he wants to add regarding recommendations for tempered glass. He indicates that it is for the good of industry.
Now…let’s pretend that, in the last three years, three NACHI members have been sued for failing to recommend tempered glass in an appropriate area. Our current SOP requires no such inspection and, if these suits had gone to trial, the SOP would be introduced into evidence and the agreement between the inspector and client that the inspection would be conducted according to it, would be introduced as well.
Chances are, a juge/jury would rule in favor of the inspector - stating that the inspection was conducted as agreed and in accordance with the SOP, which did NOT address tempered glass. BUT WAIT…
…prior to trial, the insurance company realized that by paying the plaintiff $1000 settlement, they could save a $5000 legal fee, and chose to settle.
Now, the record shows a “settlement” for the complaint instead of a possible endorsement by the court for the SOP.
Settlements are costly to the insurance providers and the inspector, no doubt. Settlements need to be considered as a cost of doing business and E&O purchasers can expect to settle claims (and pay out their deducatable along with premiums) for things that they are innocent for. It sucks. But there is no need to change your operating procedure due to the premature knee-jerk response of an E&O provider.
Worth repeating… the insurers settle and then blame inspectors for being at fault. When they settle they have a release signed, but its not an admission of guilt. They pass that onto the inspector via higher premiums and/or deductibles or denial of insurance.
has anyone checked with the bureau of statistics for these numbers you seek
Our real problem
We are 10,000 more or less inspectors and if we could get the numbers from our own members we could probably get to the bottom line
After hearing all the ideas so far I would say update the SOP even it has no effect
It can’t hurt
rlb
Ray, it would be interesting to know how many inspections were carried out during that period. This would give us a clearer view of what the actual “failure rate” was. I am betting it was pretty low. I am also betting that the chaps at C.M.H.C. were not given that information either.
Or how many inspectors in the program versus the number of claims; or how many were multiple claims against the same inspector(s).
Than again, I have been called in on a number of inspection reviews after the fact. I worked for the lawyer representing the insurer and on behalf of the inspector. The lawyer simply wanted me to verify if the home inspector followed the SOP, and conducted due diligence during the inspection.
In other words, I do not always believe that it is fair or reasonable to assume that the insurer will pay out unless the inspector did in fact mess up. Bottom line, inspectors do from time to time - some much more often than they are willing to admit. Again your mileage will vary with the quality of inspector, and the time spent conducting the inspection properly, the inspectors knowledge and understanding and most importantly reporting the conditions accurately. Missing a significant deficiency or assuming that the precanned reports will cover it, along with long list of excupulatory “weasel” clauses can quickly load the balance scale against the inspector, which leads the insurer with very little wigle room - other than to settle. So you cannot always blame them from minimizing their losses.
Knock on wood… I am knocking right now, I have not been sued (yet).
But this is an easy breakdown of factors of how to (reduce) your chances of being sued… And things I have learned from myself and other fellow inspectors. Most of these items are common sense…
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Be on-time to your inspection, Be polite and get your clients to like you! Don’t be arrogant, a know-it-all, or be rude to clients. Show them you care about their investment. And care about their safety.
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Discuss the inspection with them, talk about your findings, areas of concern, issues with the house, etc. Let them know if they have any questions… to ask you.
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Advise them that your inspection does (not) include areas that are not accessible… Tell them that you do not have X-RAY vision, but wish you did!
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Get their report back to them, FAST! If not hours after the inspection, but at least the next day… Clients like speed and effeciency! And if you do have a problem gettting their report back to them in a reasonable amount of time let them know why…
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If a client points something out to you… that you don’t necessarily agree with… make sure you incorporate their concern in the inspection report… cosmetic issues, nit-picky issues, etc. Just make them happy!
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Always be on the safe side…If there is a possible defect you are unsure about it… Err on the side of caution, refer further evaluation! It is impossible for any of us to know everything about every system or structure!
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NEVER do a home inspection or release an inspection report without having your client agree and sign your inspection Agreement. If they refuse it, then refuse their payment… and/or issue a refund.
Justin,
Good list I would just add one more.
- If you discover that you have made a mistake, resolve the issue if possible to your customer’s satisfaction as soon as possible. Don’t let your ego or lack of attention turn a minor mistake into a major lawsuit.
In 4-1/2 years, give or take 1,200 inspections I have had to resolve three issues, one was a clear mistake the other two were gray areas where I felt it was best to make a settlement.
I know a prominent Florida inspector who successfully defended a case involving a water heater the $8,500 it cost him would have purchased 10 water heaters installed. Don’t let the sun go down on a problem that you have the ability to easily resolve.
All in all, people really don’t care how much you know until they know how much you care. If your customers believe that you have their best interests at heart and you make a mistake under those conditions it won’t be as costly as a mistake that occurs when your customer feels that not only did you error but somehow you also slighted him.
very nice
genuine and accurately depicted.
16 16 have reported this information .
It would do me and I am sure many Home inspectors a lot of good if some of these cases where posted so we could see what was involved and how much they cost .