insurance and arbitration

Originally Posted By: dsutrina
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I am a new inspector and applied for E&O insurance. The Insurance company requests that I include final and binding arbitration under thew rules and procedures of the Expedited Arbitration of Home Inspection Disputes of Construction Arbitration Services, Inc… I had NACHI’s new arbitration board indicated but appearantly it was not acceptable.


Who are these guys? where are they located? and what are the rules and procedures of expedited arbitration?

thanks

Don


Originally Posted By: ekartal
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Good question.



NACHI has an arbitration board? That's like being the judge at our own court hearing. ![icon_confused.gif](upload://qv5zppiN69qCk2Y6JzaFYhrff8S.gif)

Erol Kartal
ProInspect


Originally Posted By: dfrend
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Erol, how is that like being the judge? Are you indicating the people on the board would act unethically and find for you just because you are a member? I think it is a great service. Arbitration is just that, not a trial.



Daniel R Frend


www.nachifoundation.org


The Home Inspector Store


www.homeinspectorstore.com

Originally Posted By: dbowers
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CAS is out of Dallas, Texas. They provide this service for various professions or industries other than us. Their arbitrators are people in the same industry as the complaint being arbitrated (groups like the BBB, AAA, etc often use attorneys, etc). They prefer to hold the arbitration at the site (so the arbitrator can see the alleged problem - not in a courtroom or lawyers office, etc). The person filing pays the filing fee (usually $500 - $600 with other arbitration services). Their arbitrators have 5 years or more of experience in the applicable business or profession (in the NACHI Chapter I attend, I’m the only home inspector I’ve met that would meet that requirement). Their arbitrators go through a 3-4 day training program in Dallas. They’ve been around for over 10 + years that I’m aware of. They’re known in the construction industry - we’re not.


Put them in your contract and be done with it if you're getting E & O.

If you just want an arbitration clause and you're not dealing with E & O Insurance factor, use whatever you want to.


Originally Posted By: ekartal
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Dan,


I just don't understand how members of a NACHI Arbitration Committee can be involved in the decision of a NACHI members hearing. This is how I interpret Arbitration. I was not questioning ethics. I'm just trying to see how this works.

Erol Kartal
ProInspect


Originally Posted By: dfrend
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Sorry, I inferred that. I know you were not accusing. My point is, arbitration should be done by a member of that industry, and they should be an expert. Now, why can’t it be a member of NACHI. Whoever is hearing the sides does not have to judge that you were wrong or right. They need to find a resolution to the dispute. I would think that members of a board could remain impartial as to your membership, if not they should not be chosen.


Quote:
ARBITRATION - A method of alternative dispute resolution in which the disputing parties agree to abide by the decision of an arbitrator(s).

The submission of a dispute to an impartial third person or persons. The arbitrator or arbitrators are selected directly by the parties or are chosen in accordance with the terms of a contract in which the parties have agreed to use a court-ordered arbitrator or an arbitrator from the American Arbitration Association. If there is no contract, usually each party chooses an arbitrator and the two arbitrators select a third. When parties submit to arbitration, they agree to be bound by and comply with the arbitrators' decision. The arbitrators' decision is given after an informal proceeding where each side presents evidence and witnesses.

Some arbitration proceedings are mandatory (enforced by statute), such as many labor disputes. Other arbitration proceedings are selected in advance and written into contracts. In fact, many couples who sign cohabitation agreements or divorce agreements include a clause agreeing to go to arbitration if any dispute should arise, thereby avoiding the delay, expense, bitterness and formality of litigation. Other arbitration proceedings are chosen by the disputing parties after the conflict arises, but are also to avoid the delay, expense, bitterness and formality of courts.




--
Daniel R Frend
www.nachifoundation.org
The Home Inspector Store
www.homeinspectorstore.com

Originally Posted By: ekartal
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Thanks Dan.


Now my pea brain getz it. ![eusa_doh.gif](upload://has2a0g32D0AAlDjAwVcrg3HnhX.gif)

I think everything NACHI has done is great.

Erol Kartal
ProInspect


Originally Posted By: jfarsetta
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Quote:
The arbitrator or arbitrators are selected directly by the parties or are chosen in accordance with the terms of a contract in which the parties have agreed to use a court-ordered arbitrator or an arbitrator from the American Arbitration Association.


This aint exactly true, as the AAA doesnt automatically get billing in the process, and courts do not always choose the arbitrator.

But, it takes more than industry experience to be truly qualified arbitrator. One should have had some actual experience with contract law, contract management, and negotiating skills. These skills arent learned by reading a book or taking a handful of classes, IMO.

As to the actual proceeding, one must look at the situation objectively. NACHIs arbitration board will do a good job. The idea is to remain neutral in the arbitration proccess. Much of that process relates directly to the spirit of the contract, the applicability of a standard of practice, contract law, and negotiating a settlement if one is warranted. Arbitration is advantageous, as it is much less expensive to arbitrate than sue in a conventional court of law.

Dan Bowers wrote:

Quote:
Their arbitrators have 5 years or more of experience in the applicable business or profession (in the NACHI Chapter I attend, I'm the only home inspector I've met that would meet that requirement).


Again, not really relevent, depending upon the instrumentality of the arbitration and service, as agreed to by the parties.

Arbitration can take place in any location, and is not state specific. That is, so long as the parties agree to use XYZ Arbitration Service, it doesnt matter where that service is located. For arbitration to be binding (and some arbitration is non-binding), the proceedings must follow federal statute.

Some states have additional (complimentary) statutes. More recently, a trend inarbitration is to make it less "face-to-face", and more via electronic transmittal, virtual in nature, and via teleconference. This modality tends to be more efficient, cuts down on coordination times, and holds the cost of the proceedings down. It's just as legal and just as binding.


--
Joe Farsetta

Illigitimi Non Carborundum
"Dont let the bastards grind you down..."

Originally Posted By: dbowers
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I think the important thing to remember is relevancy. If I have to go to arbitration, I want it to be with someone in a related profession that understands what I can and can’t do - not a lawyer or pschyologist.


I also want someone with EXPERIENCE doing the arbitration (5 years or more experience) - not a 1 year rookie, no matter how sharp.

I think thats also what a HI E&O insurance company would want to see.

For what we do, CAS is better at this than any group I've seen in the past 26 years.


Originally Posted By: jfarsetta
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Only time will tell, my compadre.


Sometimes, the parties want someone with LESS time in the trade and more contract knowledge. Again, it depends. The homeowner may feel that the died-in-the-wool inspector may be more likely to put himself in the shoes of the accused. Or, the Inspector may not want to see an experienced inspector judging him, as a bias may be indicated based upon association affilliations, past history, or the like. So, again, who knows? (The Shadow Knows...)

As to NACHIs arbitration board, Joe Ferry is setting it up. Apparently, some E&O carriers are pleased with the model he presented.


--
Joe Farsetta

Illigitimi Non Carborundum
"Dont let the bastards grind you down..."

Originally Posted By: dbowers
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Joe -


Your postings are confusing to a 26 year inspector like myself, who has had 2 HI ARBITRATORS on my staff in the past. When you put an arbitration clause in your inspection agreement, YOU set the rules of the game, not the client. If I want to use a particular arbitration group, I stipulate it in my contract. If I want to use a certain set of STANDARDS in any ARBITRATION PROCEEDING, I stipulate it in my contract. If I want the ARBITRATOR to be a MEMBER of ACME WIDGET Home Inspection Association with over 4.2 years home inspection experience, I stipulate it in my contract. This is especially true when you use a CONSTRUCTION oriented group like CAS (not the BBB or AAA, etc). Some people are only familiar with the BBB or AAA type of Arbitration groups. CAS is 180% molre in the best interests of someone like a home inspector - AND its well known in the construction or HI industry - AND its there, not coming.


Originally Posted By: jfarsetta
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Dan B.,


My posts relate back to the 2nd post in this thread, where someone asked about an arbitration board. Then someone else chimed in about AAA. Then you chimed in about 5 years experience and how you were the only one qualified to arbitrate in your NACHI chapter.

You are correct in that you stipulate the rules in your contract, and the client agrees to it. Bear in mind that the timeframe of signing an agreement can also invalidate the terms of your contract. Contract adhesion issues have invalidated many a contract.

My point in all this is that many things come into play. There is more than one road, or one set of rules, or one set of qualifications.

What's confusing about that?


--
Joe Farsetta

Illigitimi Non Carborundum
"Dont let the bastards grind you down..."

Originally Posted By: dbowers
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Joe - If I’ve misunderstood your post, I’m sorry but what I want to emphasise very clearly is WE set the RULES we play by - IF - we do our jobs correctly (which includes our inspection agreements, etc). Obviously many inspectors don’t know how to do this or just plain don’t do it.