Ask FREA's Ben Garrison.

[tdutt]

Originally Posted by jbushart

Now...imagine working in a state where E&O is a requirement to be licensed. It will be the insurance company, not the state or the market, who will decide whether or not you stay in business.

True. That's why you fight these kinds of requirements. Oregon has licensing, but does not require that certified h.i.'s carry E&O. If our legislators tried to pass it, the local h.i.'s would be all over it. And now, thanks to our friends from FREA, I have a post from one of the providers of this insurance that they do not and will not act in good faith toward their own insured.

[Ben L. Garrison]

The answers to most of these questions pertaining to claims and how many it will take before an insurance company will terminate you are circumstantial. Every situation is different, every insurance carrier has different underwriting guidelines, and different policies when it comes to renewing their insureds. So it's difficult for me to say.

An insurance company does not, with malicious intent, take the stance of "We are going to settle ANY frivilous claim because we don't want to pay out." Again, it's a case by case basis. But again, economically speaking, in many cases a settlement is the most cost effective route to take. So before jumping to the general conclusion that insurance companies "do not and will not act in good faith toward their own insured," let's try to understand why.

[James H. Bushart]

Originally Posted by bgarrison

The answers to most of these questions pertaining to claims and how many it will take before an insurance company will terminate you are circumstantial.

How about an answer to the question that is purely statistical...A number at the tip of the tongue of every actuary in the insurance business?

How many home inspectors were sued in a court of law (not small claims) in 2006 and/or 2005?

If you are refusing to answer, please say so.

[Ben L. Garrison]

Come on now. I would never refuse to answer a question. I will not, however, post data on this forum that I can't say without complete certainty. Definitely not avoiding the question. Only deferring it until I can get the appropriate facts.

[James H. Bushart]

Originally Posted by bgarrison

Come on now. I would never refuse to answer a question. I will not, however, post data on this forum that I can't say without complete certainty. Definitely not avoiding the question. Only deferring it until I can get the appropriate facts.

Cool. I appreciate that. Thanks.

[James H. Bushart]

Originally Posted by bgarrison

I will not, however, post data on this forum that I can't say without complete certainty.

I think it is worthy to note that, while refusing to post an "uncertain" number of actual law suits, you did post a "certain" number of anticipated law suits; to wit: all inspectors. Is this simply typical sales hype or does the data (of which you are presently uncertain) support this claim?

[tdutt]

I've taken Ben to task here in a couple of my last posts, but I would like to state that FREA has produced a very helpful CD for their insured on how to avoid lawsuits. I used to be insured by FREA and they sent this excellent CD with the policy. I want to give credit where credit is due, and though I don't like the fact that insurance companies will not go to bat for their insured, at least this insurance provider gives some helpful advice on how to avoid lawsuits; which, after all, is what we are all trying to do.
The information on the CD gave an interesting breakdown/percentage of claims by system or component that was insightful. There was other useful tips in the presentation as well. It was helpful in that I started to emphasize those areas where most of the lawsuits are originating both in my disclaimers and report writing.

Ben, if you could make that CD available somehow through this message board, I'm certain that it would generate some positive posts on the topic of avoiding litigation.

[Ben L. Garrison]

Not a problem! Hey, I'm here to help you guys out and help you understand the insurance, it's purpose, and it's function. Not to defend and support insurance carriers and their methods. Keep in mind, FREA is NOT an insurance carrier, we are a provider. Two different things. We act on behalf of our insureds in the best way we can. We are not the advocate for the insurance carrier.

[gbrasseur]

Hi all,

Just a comment from me For a new inspector, E&O is pretty redundant because when you first start out it is VERY hard to justify the high price for it. I will keep my other comments about it out, but did I mention it was very expensive? And if you do use it the likelyhood if being "dropped" is very high? Anywho just my 0.02 on the $$$ for it

[Ben L. Garrison]

Originally Posted by tdutt

I've taken Ben to task here in a couple of my last posts, but I would like to state that FREA has produced a very helpful CD for their insured on how to avoid lawsuits. I used to be insured by FREA and they sent this excellent CD with the policy. I want to give credit where credit is due, and though I don't like the fact that insurance companies will not go to bat for their insured, at least this insurance provider gives some helpful advice on how to avoid lawsuits; which, after all, is what we are all trying to do.
The information on the CD gave an interesting breakdown/percentage of claims by system or component that was insightful. There was other useful tips in the presentation as well. It was helpful in that I started to emphasize those areas where most of the lawsuits are originating both in my disclaimers and report writing.

Ben, if you could make that CD available somehow through this message board, I'm certain that it would generate some positive posts on the topic of avoiding litigation.

Troy: I think that is a fantastic idea. Good call. Now I know that inspectors are watching the CD Let me see what I can do!

[James H. Bushart]

Originally Posted by tdutt

Ben, if you could make that CD available somehow through this message board, I'm certain that it would generate some positive posts on the topic of avoiding litigation.

Interestingly enough, Troy, it was stated by a vendor who sells software designed for the purpose of avoiding litigation that it is his opinion that being insured, itself, invites law suits. He stated he carries it, himself, merely out of conscience.

His exact words "...this is a point that I've made over and over. The indisputable truth is that the best way for an inspector to avoid being sued is NOT to carry insurance."

[ekartal6]

Good Gosh.

I might have to take up drinking again.

[tdutt]

Originally Posted by bgarrison

But again, economically speaking, in many cases a settlement is the most cost effective route to take. So before jumping to the general conclusion that insurance companies "do not and will not act in good faith toward their own insured," let's try to understand why.

It doesn't seem like jumping to conclusions to me when you plainly stated the course of action the insurance company will persue. Your own example was that if a frivoulous lawsuit for $20,000 could be settled for a fraction, you'll do it. What's not to understand? What other conclusion can be made but that you will not stand behind your insured even in the case of frivoulous claims. This is why I will always be adamantly opposed to mandatory E&O insurance.

[Ben L. Garrison]

Originally Posted by jbushart

Interestingly enough, Troy, it was stated by a vendor who sells software designed for the purpose of avoiding litigation that it is his opinion that being insured, itself, invites law suits. He stated he carries it, himself, merely out of conscience.

His exact words "...this is a point that I've made over and over. The indisputable truth is that the best way for an inspector to avoid being sued is NOT to carry insurance."

I think there's some truth to that. Especially in states where there are insurance requirements. Every attorney certainly is well aware of what an Inspector is carrying. Therefore, you could make the argument that it puts a target on your back. But if you have a client who feels as if they are entitled to some sort of money as a result of some alleged mistake by the inspector, they very well might still sue. Regardless of whether the inspector is insured. Keep in mind, a plaintiff can come after you PERSONALLY after they exhaust your business assets. That's frightening.

[Ben L. Garrison]

Originally Posted by tdutt

It doesn't seem like jumping to conclusions to me when you plainly stated the course of action the insurance company will persue. Your own example was that if a frivoulous lawsuit for $20,000 could be settled for a fraction, you'll do it. What's not to understand? What other conclusion can be made but that you will not stand behind your insured even in the case of frivoulous claims. This is why I will always be adamantly opposed to mandatory E&O insurance.

Troy,

Here's a good practical application to expand on my point. Take a look at this story if you have not seen it already. It was published in the Communicator. http://communicatormagazine.com/page147.aspx