Ask FREA's Ben Garrison.

[tdutt]

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."

As did my attorney. The attorney who reviewed my contract defends h.i.'s and is also involved in construction claims litigation. When I asked him he told me that I would be more likely to get sued if I carried E&O insurance. He said that if you take away the pot of gold, lawsuits tend to go away because few attorneys will take home inspection lawsuits on contingency.

He stated that Oregon is a strong contract state, all to say that consumers need to be careful about what they sign here, because the terms of agreements tend to hold up in court. He also stated that home inspection lawsuits on average result in damages in the $4000-$9000 range with attorney fees running in the $6000-$12,000. Whereas construction defect claims are much, much higher. And best of all, there are very few home inspection lawsuits in Oregon.

This is Oregon specific information, others should not jump to conclusions about their own state. Rumor has it that the state to my south has a much different predisposition to lawsuits. Too much heat, way too crowded, and not enough clean water and fresh air I suppose.

[James H. Bushart]

Originally Posted by bgarrison

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..

Ben,

So far, we have established to your agreement, the following:

Insurance coverage invites lawsuits.

Settlements are made by insurance companies, even in cases without merit, to save money.

"Decent" insurance companies will drop an inspector who has had more than two (exact number still undetermined) settled claims.

In a state that mandates insurance coverage by law, the inspector will be forced out of business by meritless (frivolous) claims.

This is not good.

[Ben L. Garrison]

Originally Posted by jbushart

Ben,

So far, we have established to your agreement, the following:

Insurance coverage invites lawsuits.

Settlements are made by insurance companies, even in cases without merit, to save money.

"Decent" insurance companies will drop an inspector who has had more than two (exact number still undetermined) settled claims.

In a state that mandates insurance coverage by law, the inspector will be forced out of business by meritless (frivolous) claims.

This is not good.

And you wonder why I don't post a ballpark number of claims, lawsuits, etc., etc. All I am saying is that the arguement could be made that carrying insurance can place the bullseye on your back. And the argument can also be made that not carrying insurance is absolutely nuts. It comes down to personal preference when you're doing business in a state that has no insurance requirements. Otherwise you have no choice. I'm not trying to defend the insurance company and their actions, keep that in mind.

[James H. Bushart]

Originally Posted by bgarrison

And you wonder why I don't post a ballpark number of claims, lawsuits, etc., etc.

No, sir. I don't wonder.

I believed you when you told me that you would post it as soon as you got to your desk where the information is kept. Are you there yet?

[Ben L. Garrison]

I'm workin on it

[lcapaul]

Originally Posted by tdutt

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.

What then is the $300,000 or $500,000 Liability Insurance requirement in Oregon if not E&O, what is the difference there?

Myself I beleive that Oregon has one of the best written HI's Laws in the Country.

[lcapaul]

Ben,
When is FREA going to offer Occurance type E&O?

[Ben L. Garrison]

Originally Posted by lcapaul

What then is the $300,000 or $500,000 Liability Insurance requirement in Oregon if not E&O, what is the difference there?

Myself I beleive that Oregon has one of the best written HI's Laws in the Country.

The State of Oregon requires Inspectors to carry $300,000 to $500,000 of General Liability (Property damage and personal injury sustained by someone OTHER than you the Inspector). I also believe they require either a $10,000 or $15,000 bond. The CCB MUST be named as an additional insured.

[Ben L. Garrison]

Originally Posted by lcapaul

Ben,
When is FREA going to offer Occurance type E&O?

Lewis:

We would look into offering an Occurrence based policy. But the one thing stopping us is that it's generally $500-$600 more than a Claims made.

So let me raise this question for discussion: Is an Occurrence policy something that you as Inspectors would like? And willing to pay more for? Let me know and I'll see what we can do.

[Brian E. Kelly]

Originally Posted by bgarrison

Lewis:

We would look into offering an Occurrence based policy. But the one thing stopping us is that it's generally $500-$600 more than a Claims made.

So let me raise this question for discussion: Is an Occurrence policy something that you as Inspectors would like? And willing to pay more for? Let me know and I'll see what we can do.

No.

[Ben L. Garrison]

The topic of E&O Requirements was brought up earlier in this thread. The attached link is a good reference to what each state requires.

http://www.nachi.org/eorequirements.htm

[Stephen W. Stanczyk]

Originally Posted by sstanczyk

Looking for number of claims, whether they went to arbitration, court or were settled for the year 2005 in the State of Washington ONLY.

Thank you.

Ben,

Still waiting for an answer to this question. New HI legislation is getting close and this is information that could come in handy. Time is of the essence.

Thank you,

Steve

[tdutt]

Originally Posted by bgarrison

The State of Oregon requires Inspectors to carry $300,000 to $500,000 of General Liability (Property damage and personal injury sustained by someone OTHER than you the Inspector). I also believe they require either a $10,000 or $15,000 bond. The CCB MUST be named as an additional insured.

You are correct Ben. But your answer reminded me of a question I asked the CCB about the bond requirement. How is the bond different from E&O insurance? I'm also a licensed specialty contractor in this state and just about anyone I do business with can file a claim with the CCB or a lawsuit and seek compensation from the bond that I'm required to have; unpaid employees, unpaid subcontractors, unpaid material suppliers. But it's mostly used for clients that contend that contractors haven't delivered the services itemized in the contract who go after the bond. If they succeed the bond comany pays out the award, but then the contractor has to pay back the bond company the amount awarded in the claim up to the limits of the policy. No claim or combination of claims against a licensed company can exceed the limits of the bond, or $10,000 to $15,000.
When I asked the CCB this question they couldn't tell me the difference between the bond and E&O. The woman who has the oversight of the home inspection certification at the CCB told me it's never been challenged, no client to her knowlegde had ever gone after an inspectors bond like they would if the home inspector was a contractor.
By the way, if E&O could only pay out the way companies that write bond policies do in our state, then I'd be all for mandatory E&O of all home inspectors. It would be a fair system, because the claimant would have to prove in arbitration with the CCB or in court that the home inspector did not follow the Standards of Practice and the arbitrator or court would have to rule in favor of the claimant before the E&O company paid out.
I also think that E&O policies should only be in the $10,000- $20,000 range as well. When you guys throw out these obscene numbers like $500,000 to $1,000,000 policies what do you accomplish but encourage the litigous crowd to come gunning for you.
My attorney said the average claim in Oregon is $4,000 to $9,000, so what's the point of dangling hundreds of thousands of dollars in front of the greedy.

[Ben L. Garrison]

Originally Posted by tdutt

You are correct Ben. But your answer reminded me of a question I asked the CCB about the bond requirement. How is the bond different from E&O insurance? I'm also a licensed specialty contractor in this state and just about anyone I do business with can file a claim with the CCB or a lawsuit and seek compensation from the bond that I'm required to have; unpaid employees, unpaid subcontractors, unpaid material suppliers. But it's mostly used for clients that contend that contractors haven't delivered the services itemized in the contract who go after the bond. If they succeed, then the contractor has to pay the bond company the amount awarded in the claim up to the limits of the policy. No claim or combination of claims against a licensed company can exceed the limits of the bond, or $10,000 to $15,000.
When I asked the CCB this question they couldn't tell me the difference between the bond and E&O. The woman who has the oversight of the home inspection certification at the CCB told me it's never been challenged, no client to her knowlegde had ever gone after an inspectors bond like they would if the home inspector was a contractor.
By the way, if E&O could only pay out the way companies that write bond policies do in our state, then I'd be all for mandatory E&O of all home inspectors. It would be a fair system, because the claimant would have to prove in arbitration with the CCB or in court that the home inspector did not follow the Standards of Practice and the arbitrator or court would have to rule in favor of the claimant before the E&O company paid out.
I also think that E&O policies should only be in the $10,000- $20,000 range as well. When you guys throw out these obscene numbers like $500,000 to $1,000,000 policies what do you accomplish but encourage the litigous crowd to come gunning for you.
My attorney said the average claim in Oregon is $4,000 to $9,000, so what's the point of dangling hundreds of thousands of dollars in front of the greedy.

Simply put, an surety bond is "insurance" to guarantee the completion of a contract. If you default on a project, mid-contract, the bond can ensure that it's completed. E&O is protection for any errors and ommissions made in your inspection report. For example, you can't see that a roof is leaking because you inspect a house on a nice sunny day. Six weeks later, you get a claim filed against you for water intrusion. You're protected under your E&O in this situation.

Now, with regard to the policy limits being $15,000 - $20,000 you need to keep in mind that the majority of the money spent is on the legal fees. Chances are, everyone who stepped foot in that house could be named in a lawsuit... the agent, broker, etc., etc. With depositions and everything else that could occur as a result of the claim, serious money can be spent. And let's not forget the expert witness who can help exonerate you does not come free of charge. Well, in some cases they might.

What would be interesting to see, as a method of TORT reform, is to have plaintiffs be responsible for some of the money they are suing for should the claim be deemed frivilous or meritless. But that is very subjective in ways.

[James H. Bushart]

How are you coming on getting those numbers together you promised a couple of days ago, Ben?