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Home Inspector Professional Liability

Home Inspector Professional Liability

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Published by Joe Farsetta
Home inspectors are vulnerable to professional liability. What options are available to help protect themselves against the high potential costs of litigation?
Home inspectors are vulnerable to professional liability. What options are available to help protect themselves against the high potential costs of litigation?

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Published by: Joe Farsetta on Nov 13, 2009
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09/11/2012

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Inspection Arbitration Services offers home inspectors a cost-effective alternative tothe high potential costs of litigation - a valuable option in today’s litigious societyand current market conditions.Professional liability is defined as “the area of law concerning lawsuits broughtagainst a professional in the course of their profession”. Home inspectors, like otherprofessionals, are vulnerable to professional liability actions. When a client isdissatisfied with an inspection, typically because some defect is discovered afterclosing, the knee-jerk reaction is often to blame the inspector. Second only to theinspector comes placing blame on the Realtor, especially if the inspector wasrecommended by them.What can a professional home inspector do to protect himself from frivolous claims?Home Inspectors can purchase E & O Insurance which protects them for claimsarising from allegations of wrongful acts, errors and omissions in their inspections.Whether or not an inspector decides to carry E & O insurance is a personal decisionunless the state the inspector lives in requires it. Even if the inspector decides tocarry E & O, what kind of protection is available if there is a gap in their coverage?What about if the inspector provides ancillary inspection services such as radontesting, termite inspections and mold inspections? These services are not coveredby a normal E & O policy; often a separate rider is required. E & O premiums costseveral thousand dollars/year and in the case of a dispute, the inspector often hasto settle the claim by paying out of his/her deductible. So even if an inspectorcarries E & O insurance, he/she is still out of pocket thousands of dollars shouldhe/she be named in a lawsuit, even when he/she has done nothing wrong. Theproblem with E & O insurance is that it often paints a target on the inspector’s back.E & O does not protect the consumer for the majority of payouts are from thedeductible that the inspector carries, anyway. E & O insurance is also an expensethat few part time and rural inspectors can afford and often puts them out of business. If an attorney gets involved, the next thing the inspector knows, he/shereceives service to answer a complaint. Even if they are in the right and have donenothing wrong, they need to either represent themselves, tender the claim to theirE & O carrier (and relinquish all control), or hire their own attorney. The mattertends to get expensive in a hurry. The specter of a lawsuit can weigh heavy on an inspector’s mind. InspectionArbitration Services (IAS) can help the inspector avert a lawsuit before it happens.Arbitration services tend to be rather costly, even though they are often still lessexpensive than legal services. IAS offers a low cost, fixed-price mediation andarbitration service dedicated exclusively to the inspection industry, with neutralsthat are intimate with the workings of the inspection industry. IAS is unique in that itis Internet-based, concentrates on inspection mediation and arbitration ONLY anduses neutrals that are experts in their respective fields, all relevant to theinspection industry. If a dispute goes through the court system or is arbitrated bysomeone other than an inspection industry expert, those who will be ruling oninspection dispute cases have no inkling of the inspection business. They are easilyfooled and swayed from arguments on either side….they are simply looking for thecheapest way of resolving the issue for the provider. Neither side can expect“justice” and, in that respect, neither side is actually “protected”.

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