…after you stopped inspecting? I moved out of TX last July and have no plans in the near future to do home inspections. I kept my E&O through this year just on the off chance something came up. It’s a year since my last inspection. I had about 800 inspections over 3 years. Only one call back for something that was a non-issue. The client was just looking for information more then anything else.
I’m pretty sure the statute of limitations on a home inspection in TX is 4 years. Would you continue to carry the E&O until the 4 years have passed?
I’m thinking about not renewing for next year. Any advice?
I may be wrong, check with your agent, but I would think you would be covered because you carried it at the time of the inspection. They would be suing over an inspection covered by it, so I would expect it to still cover what it had covered. Check with your agent, though.
I was mandated to carry mine for 1 year after retiring by the provincial association.
Ultimately though depending on your jurisdiction the inspector could be liable for E&O up to 7 years after date of discovery. - That’s not date of the inspection - but the date after discovery of the significant deficiencies by the client.
Patrick…I think you are looking for ‘tail coverage’, right? Every so often I have to go read up again on claims made, occurrence and tail coverage to understand the options. I can’t keep it straight for some reason. Anyway, you might be able to purchase tail coverage for your particular situation at a reasonable cost.
Pat, I would advise you to call your agent an discuss the issue, you may be able to purchase “tail coverage” so that prior inspections are covered this would reduce your costs without expanding your potential liabilities.
Here’s the deal: IF you have a “Claims Made” policy, the policy must be in force at the time the claim was made. If you terminate it without purchasing a “tail” policy, you have no coverage.
Alternatively, if you purchased an “Occurence” based policy, that generally comes with a 4 year tail built in. You will pay a higher price up front for this type of policy.
To give you an example of what you might pay for a tail, I can tell you that FREA offers 1 year tail coverage for 35% of the previous years dues. Or 4 years for 75%.
Mr. Bell, aside from the Homestead Act, how does Florida enable you to protect your assets more so than othe states? I’m asking merely out of curiosity.
by the way, who was the genius that came up with a claims made policy? You got to love insurance that you pay for and are insured at the time of said inspection, but then cancel your policy and the insurance doesn’t have to pay even though you were covered by them on that date. claims made policies should be outlawed as they are the biggest rip-off around.
That’s more common than one thinks, which is why I highly recommend continued follow-ups after the inspection. I follow up after 3 days, after 14 days, after 30 days, when I know escrow has closed, 30 days after escrow closed, 90 days after escrow closed, six months after inspection, and annually forever after the inspection.
If your company no longer exists in Texas, and you are no longer in Texas, I see no reason to have tail coverage on your Texas inspections, even if you still have personal assets in Texas.
Real estate is a state thing, so you’ll probably find that you can’t be sued in Maryland for real estate problems in Texas. We commonly have that problem here in California with so many people moving out of state. They’ll fail to disclose something significant, and then when the buyer decides to go sue, he finds that the sellers are now in a different state and can’t be sued. We call it “disclosure by flight,” i.e., “I’m fleeing to another state so any disclosures that I should have made won’t affect me.”
The exception would be if your real estate problems in Texas resulted in death or personal injury. Consequently, if I were in the same situation, I would not continue tail coverage.
Morning, Greg. I have Occurence E&O, and am covered for 2 years after an inspection that was covered by my insurance at the time the inspection was performed. That was why I said for him to check with his agent. I wasn’t sure if all policies were written like mine is.
Heck, If I’m wrong, just tell me. Been wrong before, and probabley will be again.
“Claims made” policies make up the majority of all the E&O policies being offered these days. How could an insurance company stay in business if it collected only one year’s premium, theoretically, yet was on the hook for potentially 300 inspections that you did in one year? For up to 4 years after those inspections were performed? The alternative is a more expensive occurrence policy. Pay 'em now, pay 'em later.
Interesting info Russel. I’ll have to speak to an attorney in TX and check on that.
My license is still active in TX until July of 2008. I renewed right before I left figuring that it would help since MD didn’t have active licensing requirements when I moved here. But I don’t see me doing inspections anytime in the near future so I probably won’t renew it next year.
An active license doesn’t necessarily mean that you’re in business although it does lead the unknowing into believing that you are in business. However, anyone interested in suing you would have to serve you, but for real estate matters not involving death or personal injury, it not only would be difficult for someone wanting to sue you to serve papers in another state, but you wouldn’t necessarily have to respond since you’re not in that state.
I believe there are a couple of states (I don’t think Texas or Maryland were them) that would enter a default judgment if you didn’t respond or make an appearance at the “trial,” thereby making it difficult for you to visit the state and/or making it difficult for you to dispose of any assets. Generally, though, exclusing deaths or personal injury, a lawsuit involving real estate probably just ain’t gonna happen if you’re in another state unless you have a multi-state business, such as a franchisor (not necessarily the franchisee, though).
Let’s put this in a relative context. You inspected my home 6 months ago, made a legitimate mistake in the report but had since relocated to Oregon. I file suit in Texas. Texas is where the inspection took place so that’s the State that has jurisdiction over the matter. You decide you don’t have to respond to the suit because 1) You no longer have insurance & 2) You’re in Oregon.
I get a default judgment against you for $100,000 and hound you for it for the next 20 years. It would not be difficult for me to garnish your wages, obtain a constructive trust on any of your assets and destroy your credit so you would never get a mortgage, buy a car, get a credit card or even rent an apartment… until you paid up.
I might be biased, but I think the tail policy is worth some consideration.
