high liability

[John Dirks Jr]

Home inspection is considered a high liability business. Why is that? What are the specifics that lead to higher incidence of lawsuits?

[qhinspect]

Home inspection is considered a high liability business. Why is that? What are the specifics that lead to higher incidence of lawsuits?

The type of people that live in the area. There are some that feel they are getting screwed all the time. So when something comes up, they take it too far.

Some pest companies around here will not do a WDI inspection for home buyers because of liability. Only for current owners.

[Richard Moore]

Not sure about "specifics" but you can start with the following...

1. Incompetent inspectors.

2. Crappy Inspections.

3. Incomprehensible reports.

4. “Sweetenedâ€

[John Dirks Jr]

I wonder if there is a statistical record of sorts that measures when a particular type of business is labeled high liability.

Could it be the potential cost of of the incidents or the percentage of incidents compared to the whole?

[Richard Moore]

I've not actually seen the "high liability" label anywhere but, based on our premiums, I have no reason to doubt you. I imagine that it's the high cost of a potential personal injury claim as much as unreported house damage. Look at appraisers versus us. Their E&O is dirt cheap compared to ours and it is probably because their job is pretty much restricted to "guessing" the right price for the home. Get it wrong and their liability would mostly be an easily calculable dollar amount. We, on the other hand, report on not only the condition of the home, but also the safety for its occupants. If someone falls off a balcony and breaks his neck because of a loose guardrail we should have caught, I doubt it would matter to a jury what we put in our agreements and disclaimers. You only have to watch late night TV ads to see how lawyers circle the waters waiting for a personal injury lawsuit.

I'm sure every insurance company has the statistics. I don't know if they would be available for the public. Keep in mind that insurance companies do compete with each other for business, and so, I expect that our premiums are generally in line when compared to the risk for other professions. That's not to say premiums couldn't be lower if the insurers would actually defend a frivilous or unjust claim rather than just settle and pass on the costs. But...that's another story.

[SonOfSwamp]

Home inspection is considered a high liability business. Why is that? What are the specifics that lead to higher incidence of lawsuits?

Pardon my saying so, but in my humble experience, there are just too many HIs who don't have the skillset to do a decent job. I've spent the last few years reading nonsensical reports, listening to garbled tales and outright lies, and seeing one HI brought into the courtroom straight from the drunk tank, and in chains to boot. (That leaves an impression!)

It is devilishly hard to find competent HIs. To paraphrase brother Katen, it seems that many if not most HIs learn everything they know by reading boilerplate in canned HI software.

Here's an example of high risk: Here in assbackwards Tennessee, the RE lobby made dang sure (via the licensing rules & regs) that every HI is set up for a lawsuit. TN HIs have to have E&O. If an HI makes one little mistake, or if some muleheaded customer just thinks he made a mistake, his deductible and his premiums go up and stay up.

It would help if there were a legitimate HI knowledge base. Something other than the usual folklore. Thirty-plus years of "professional" HI work, and no knowledge base yet...

WJ

[hausdok]

It would help if there were a legitimate HI knowledge base. Something other than the usual folklore. Thirty-plus years of "professional" HI work, and no knowledge base yet...

WJ

Actually, it's 50+ years. John Ghent started in the late 50's, I believe. The late great Melvin Chalfen began his home inspection career in 1956. It just took them 20 years to get around to organizing.

The problem with this gig is that it's mostly populated by old farts backing into it from somewhere else and most the guys backing into it are not in it for the long haul. They have no interest in writing down their knowledge or passing it on to a younger generation; they just want to make as much as they can in the shortest possible time with the least effort, line their nests as best as they can and retire.

If we really want a solid knowledge base for this gig, we need to get young people coming into it early, get them committed to it as a career, and get them to begin the onerous task of building a solid knowledge base that someone is going to shepherd for the next half century.

ONE TEAM - ONE FIGHT!!!

Mike

[qhinspect]

Home inspection is considered a high liability business. Why is that? What are the specifics that lead to higher incidence of lawsuits?

Pardon my saying so, but in my humble experience, there are just too many HIs who don't have the skillset to do a decent job. I've spent the last few years reading nonsensical reports, listening to garbled tales and outright lies, and seeing one HI brought into the courtroom straight from the drunk tank, and in chains to boot. (That leaves an impression!)

It is devilishly hard to find competent HIs. To paraphrase brother Katen, it seems that many if not most HIs learn everything they know by reading boilerplate in canned HI software.

Here's an example of high risk: Here in assbackwards Tennessee, the RE lobby made dang sure (via the licensing rules & regs) that every HI is set up for a lawsuit. TN HIs have to have E&O. If an HI makes one little mistake, or if some muleheaded customer just thinks he made a mistake, his deductible and his premiums go up and stay up.

It would help if there were a legitimate HI knowledge base. Something other than the usual folklore. Thirty-plus years of "professional" HI work, and no knowledge base yet...

WJ

lol. When I lived in Kentucky about 10 years ago, I couldn't count how many negative things I heard about builders and guys/companies that remodeled. If I remember correctly by something I seen on TV back then, Tennessee was one of the worse when it came to improper construction and remodeling of houses. While parts of Kentucky was no better, I can see why home inspectors are getting sued. Likely they learned the wrong way of doing things when they were in the trade then decide to become a home inspector.

I am able to relate to what was reported/said about Tennessee because of some of the things I seen in Kentucky. In Bowling Green and surrounding counties, I would stop by during construction of a house and just couldn't believe what I was seeing. While many of the problems would be visible if I did the home inspection at a later time, there were also many problems I was seeing during construction which were going to be covered up. In that area at that time, many did not sue if a problem arose.

[mthomas1]

Looking back, when I was first getting started in this business it was just pure dumb luck that I'd didn't get sued for some of the things I missed. That, and the fact that my clients saw I was working very hard trying to do a good job, and that I was on the spot, pronto, when there was a complaint.

And the thing is, many of these were things I would still "miss" today - the difference is that back then I didn't understand the job well enough to make clear to my clients the practical limitations of what I could do under the conditions of a typical home inspection (often, I didn't really understand them myself).

I wasn't saying things like "When I can find two cracked rafters like these in twenty minutes, it is entirely possible that the when a carpenter gets up here to repair them , sets up his work lights, and carefully examines every rafter, he will find additional cracks that I can't see under these conditions in the time I have to inspect this attic" or "When a property has a second layer of siding installed like this, I have no way to determine if the water seals - especially at the windows and doors - are adequate. I didn't see any evidence of water intrusion at the interior, but I know from experience that if you get a "once a decade" hard driving rain it's possible you'll see moisture present at the interior, especially around these windows".

Of course there are times when we do miss things we should have seen - all it takes is a mote of dust in your eye or moments distraction answering a client's question, or we are just not aware of the significance of what we do see.

And there are people determined to sue you for the things you could not have discovered (for example, the grossly insufficient header over a modified interior load bearing wall that becomes apparent when the new owners fill the king-size water bed on the floor above), and people ready to sue you when they know it's not your fault, but who are looking for somebody to pay for their own negligence, greed, ignorance, inefficiency or stupidity.

But based on the anecdotal experiences of other inspectors, and my own interactions with clients, I suspect that much of our liability is for "oversights" that we should have educated our clients to understand are actually outside the practical scope of our inspections.

[Scottpat]

Like Richard, I have not seen the high liability issue.

Look at the number of home inspectors that we have in the country. A good estimation is around 40,000 folks who claim to be home inspectors. Out of those I would say about 25,000 are full time home inspectors. This is a very small "risk pool" and one of the reasons we see such high insurance rates for our profession. I really don't think it is based on claims, but more on the number in the "Risk Pool".

As with any profession you as the professional control your risk exposure. By doing the best job that you can, not offering off the wall services, writing a clear and simple report, having a good attitude (not abrasive), professional appearance, and knowing as much as you can about the subject at hand will go a long way at lowering your liability.

A great deal of this is also based on my working in plaintiff and defense cases involving home inspectors over the past ten years. A number of real estate lawsuits are "shotgun" lawsuits and this simply means that everyone who was involved in the real estate transaction from the Title company to the Handyman are named in the lawsuit. Unfortunately this includes the home inspector the majority of the time with this type of lawsuit.

[JeremyDP]

If we really want a solid knowledge base for this gig, we need to get young people coming into it early, get them committed to it as a career, and get them to begin the onerous task of building a solid knowledge base that someone is going to shepherd for the next half century.

ONE TEAM - ONE FIGHT!!!

Mike

Sounds like the Library and File Directory needs to be maintained, and/or revamped so both us new guys and the experienced ones have good reference materials.

After looking at a follow member's website, I have plans to verify the estimated life expectancy of systems in a home and post it in the Library.