Que the laser beams and loud music…
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No, they determined there was “no claim against the insured” , and told the homebuyer to re-read the report again.
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This is a suitable time to discuss the home inspector’s actions when a complaint was made that he thought could become a lawsuit.
First, look at what he did not do. He did NOT contact a lawyer who is not licensed to practice law in his state to attempt to quash the complaint or intimidate the customer with legal jargon. If he had, and a suit was filed, neither the unlicensed attorney or his insurance company would have agreed to cover his defense.
What he did was immediately notify the insurance provider as his contract with him requires him to do. They looked at the evidence and determined that his actions were defensible, no settlement offer to the customer would be necessary, and agreed to cover his legal expenses if a suit was filed.
I think there is a lesson here.
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So IMO the insurance company definitely did not leave the inspector “High and Dry”, as previously stated. But instead did the right thing and we’re ready to stand behind him legally.
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Correct. Nick stated that he had incorrectly interpreted their “denial of liability” to be a “denial of the claim” which was not.
No claim was made against the E&O provider by the home inspector since no suit was filed against the home inspector by his customer.
Customers do not file claims on a home inspector’s E&O policy. There are many who do not know this. I’ve seen home inspectors actually advertise the fact that they are insured as being a protection for their customers when, in most cases, E&O insurance protects inspectors FROM their customers. I’m not even certain that Nick fully understands that, and he sells it.
His poor clients, Matthew and Kaylee Lalumia (who have a toddler), tried to resolve their claim, but the inspector’s insurance sales company refused to help at all.
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That was only one of multiple reasons I went with InspectorPro/Citadel Insurance. Obtain a copy of InspectorPro/Citadel Insurance policy and have it compared/scrutinized against your carrier. There are plenty of differences that can be tweaked if your carrier chooses to do so. The InspectorPro/Citadel Insurance policy filled all of my needs and more I was not looking for.
You are correct.
You are correct. My bad. It left his client high and dry.
Bogdan and I are working on something that will resolve such situations in the future, a sister to the Buy Back program.
Even though I don’t participate, I think the Buy Back program is pretty sweet. It’s a nice marketing tool and it sounds like has paid off for a few inspectors.
The biggest problem I see is some users on Facebook talking about how they use it selectively. If they are going to use the program and include it in their marketing materials, they would be wise to make sure every inspection is covered. Some of these guys are going to get burned when a client comes calling but the inspector failed to enroll that particular inspection in the program.
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A crossed eyed nimrod could see that walking into a house, 
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It did for this inspector, and his clients.
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I agree. The inspector was able to make everyone happy (at least as happy as possible considering the circumstances) even though by the sounds of it he wasn’t liable. And the client even used him for another inspection.
The agents got, or will get, some additional commission from the resulting sales.
And honestly, the buyer’s agent is probably the most happy because they are completely off the hook. They will likely continue to use that same inspector moving forward knowing that the inspector had a way to take the heat off everyone.
What’s not to like about this? I kinda feel like I should get enrolled in this program, lol.
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I missed this one, Nick. I think I can help you help them with this. It has much to do with the state laws that govern insurance.
First, one must know the difference between an insurance agent and an insurance broker.
An agent of the insurance company has a fiduciary duty to his company which, as you know, means that his license to sell insurance requires that he put the financial interests of his company first. Insurance agents are there to sell policies and collect premiums. When claims are filed with them, they must pass the claim on to the Claims Department designated to handle the claim.
I have personally known insurance agents who have been fired for crossing that boundary and going too far to help a customer try to convince the insurance carrier to pay the claim. I have personally represented insurance agents who had their own claims denied by their own insurance company. In one case, the agent filed a claim for damage to his own two buildings in a strip mall from softball size hail and was paid $200, and I took over the claim and got him an additional $111,000.00. The agent was (and is no longer) with State Farm.
Brokers have no fiduciary duty to the insurance company because they are neither employee nor agents of the company, but they purchase policies on behalf of others. In that regard, they have opinions that they may or may not wish to share with the carrier on their customers’ behalf but no real clout to put behind their opinions. The carrier has the final word over anyone selling their policies to others.
It is also important to note that one does not file an insurance claim with a broker since the broker is not an agent of the company. The claim is not officially filed until after the broker has presented it to the company that issued the policy. Until he does, there is no claim filed and nothing for him to “handle”.
So what you are reading on social media is coming from home inspectors who do not know and understand the limitations of taking their complaint to the person who sold them the policy. It equates to complaining to the receptionist at your doctor’s office that a prescribed medicine has not made you well yet.
It will forever boggle my mind to know that there are so many people in America willing to enter into contracts valued at a million dollars or more without reading them, first - and then expect the receptionist who handed it to them to sign to get them out of a jam when they hit a landmine buried in the contract language.
Thank you James, great info.
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Well, the word “department” implies that it is part of the salesman’s company, in their building where the salesman and the underwriter bump into each other at the water fountain in the hallway. In our industry, with one exception, the underwriter is a totally separate corporation in another city with interests and and a fiduciary duty that is not the same as the salesman’s, not the same as the consumer’s, and not the same as the inspector’s.
No. If you visit the agent who sold you your home or business insurance policy, the only thing you will find from the actual company that employes him is the sign on his door.
Agents and claims departments are separated, by design, since the insurance company wants one of them completely devoted to collect the money (the agent) from the client and the other (the claims department) to keep as much of the collected money in the bank and out of the hands of those who file claims. Allowing an agent to be involved in the claims process is considered a conflict of interest and, as I stated before, has resulted in agents being fired for sticking their noses in that process.
A broker, who also sells insurance policies, has no connection at all to the insurance company. He is neither an agent nor employee. He is a marketer who solicits customers for the insurance company (usually several insurance companies). When you present your claim to your broker you have yet to even file a claim since a broker has no authority at all to act on behalf of the company that wrote the policy. Your claim has not been filed with your insurance company until such time the broker provides it to them and that is where his involvement ends.
(On a side note: When the broker provides your claim to the insurance carrier, he is acting on your behalf. This means that whatever information he provides, correct or incorrect, it is as if the information came from you. For this reason, it is never wise to submit your claim to your broker but rather to the insurance provider, directly.)
Of course, brokers like to talk as if they have some kind of influence. Remember … they are marketers and are paid dividends when you renew. Legally, however, they do not represent the insurance company in any communication to you about your claim.
I think that’s what I was trying to say.
That’s what I was trying to say. Yes.
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You do remember Chris right? Because the of the term “WE will buy back your home if we miss anything”, Chris was included in the “We”. Now Chris is being sued to buy the house because the NACHI program denied the buy back.
In fact, the buyer failed to win against the insurance company so they used this program to sue the inspector directly.
Personally, I do not want to buy any houses.
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Same here Brian!
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Good morning Nick. As I recall, you had intentions to change the tag line on that program. You may have reversed course which is ok with me.
I would be inclined to participate if the tagline said something like:
“If your inspector misses anything, NACHI will buy back your home”
Just my 2 cents.
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