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InspectorPro Insurance

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  1. I agree with that. It's in everyone's best interest--especially the client--that the client properly vet the inspector they're using.
  2. I agree with everything you said except the last part: "The agent cannot make a fair decision on the best inspector for the client because he will be affected by the result." This would mean that all agents would only refer clients to inspectors with "don't kill the deal" attitudes. Based on anecdotal evidence of speaking with inspectors that receive realtor referrals, I don't believe this is the case. And, from a data standpoint, we're constantly looking for similarities between claims so that we can offer better risk management solutions to inspectors based on trends. In reviewing thousands of claims, we have yet to pick up on a correlation between realtor referrals and poor inspection practices. So, if one exits, it's not big enough to be blatantly obvious. The bottom line: We don't have any evidence to suggest that receiving realtor referrals puts our clients at increased risk, either because of the agents' or their own actions. Until we do, we think it best to let the home inspectors individually decide if agent referrals are helpful or detrimental to their businesses and respect the decision either way. Returning to the article that started this conversation: The intent of the article wasn't to endorse agent marketing or argue that all inspectors should market to agents. Rather, the intent was to explain a common insurance policy endorsement through the lens of something we know a lot of inspectors are doing: marketing to realtors. We hope that, by putting referring party indemnification in this frame, we can both better engage our readers and increase their understanding of how their policy applies outside of the "named insured."
  3. Hi @Marc. I'm kind of confused by your response. You say that recognition of agent expectations can be a detriment to the client. What do you mean by that? Here's some clarification on what I meant: Many home inspection clients turn to real estate agents not just for inspector recommendations but inspection information. As such, it can be helpful to make sure that the real estate agents involved understand the basic definition and scope of a home inspection. It also helps if agents know to direct questions and concerns about the inspection back to the inspector rather than weighing in themselves. We've seen some agents mitigate and other agents exacerbate issues for our inspector insureds based on their understanding (or lack of understanding) of home inspections. While it isn't a home inspector's duty to make real estate agents aware of basic home inspection protocol, helping set appropriate inspection expectations with agents can serve inspectors' and agents' shared clients immensely.
  4. Great points, @Marc! Client expectations definitely need to be managed, and I think management of those expectations contributes to making clients happy. (i.e. When your client finds mold behind a wall during renovations, they're not going to point the finger at you if they have a good understanding of your inspection's scope and are satisfied with their interactions with you.) I think the same could be said about agent expectations.
  5. @Jim Katen, thanks for your response. Based on your comments, it sounds like we're working off of completely different paradigms. You say that you "believe strongly that there's no 'delicate balance'" and that "if you cover your client's butt, [yours] will be covered automatically." Our philosophy dramatically differs in that we believe there are specific things home inspectors should do to manage their risk and limit their liability outside of being a good technical inspector. So, I believe we've reached an impasse. However, I do appreciate you taking the time to articulate your position and read our content—even though we don't always agree!
  6. Thanks for clarifying, @Jim Katen. I think you make an important point about on whom inspectors and agents should primarily focus: clients. While it is important to limit your liability to protect against potential litigation, inspectors' and agents' main focus should be serving their client home buyers to the best of their ability. It's a delicate balance but an important one. Now, there are a few points that you make that I want to address. First, you argue that it's potentially problematic to not disclose referring party indemnification to clients. I'd argue that a lack of disclosure doesn't hurt the consumer while a disclosure can. As a general rule, we don't recommend that home inspectors advertise the fact that they carry insurance to clients--even if they're in a state that requires them to carry insurance, so that fact can be inferred with licensure. The reason being is because most people have an easier time mentally filing a lawsuit against an insurance company rather than an individual, and there are the occasional suit seekers. A great example of this issue is a conversation I had with one of our insureds a while back. He'd had three claims come in in less than six months, which is pretty unusual, so the underwriters tried to investigate what about the inspector's behavior might be promoting such suits. They didn't find anything glaringly wrong with his technical inspection practices. However, upon visiting the inspectors website, they found a big, bold advertisement of his insurance information on his homepage. By promoting his insurance information, the inspector was attracting clients who perceived his inspections as warranties for which they could get refunds (and then some) if anything was amiss. This isn't best risk management practice. Second, you argue that consumers may perceive referring party indemnification as an unfair arrangement between inspectors and agents. I can see this happening but only because I think a lot of people wouldn't understand what referring party indemnification actually is. Putting it into a different context, say my primary care doctor referred me to a surgeon who ended up botching my operation. I sue both the doctor and the surgeon, and the doctor turns around and says to the surgeon, "Hey, you're the one that messed up. I'm filing my claim with your insurance." As a consumer, I wouldn't blame the doctor for doing this nor would I really care because my claim is getting addressed either way. Again, my perspective might be skewed since I've actually read referring party indemnification endorsements, but to me, I think it's pretty fair when you think about it in terms of whoever did the work is paying for problems with the work.
  7. @Marc, I think you make a lot of good points about agent motivations and how they can negatively impact inspection results. It's not something we publish on much, but it is something we discuss with inspectors over the phone and at conferences. Compromising inspection results to appease realtors is a disservice to their shared clients. Plus, it opens inspectors up to liability, which, in turn, opens us up to liability. So, it certainly isn't something we condone. Returning to the premise of the article itself, it is possible to have relationships with real estate agents that provide client referrals without compromising inspection integrity. It requires inspectors to be selective in who they choose to work with and diligent in setting appropriate expectations. We insure many inspectors with healthy working relationships with realtors who respect their work--even when it "kills" a deal--because they recognize the value of accurate, thorough inspections. We hope that inspectors use the ideas presented in the article to find agent relationships that don't just support their business but that support their clients and the inspection industry. @Les, we didn't really think of referring party indemnification as a marketing tool, either, until we started getting questions about it. Questions like: 1. Real estate agents are afraid of being wrapped into lawsuits regarding my home inspections. Is there any way my insurance can cover them, too? 2. Do you have any flyers, presentations, or other marketing materials about referring party indemnification I could use to educate the agents I work with? Those questions popping up over and over again made us think we needed to a) clarify what referring party indemnification is and how to recognize it in your insurance policy and b) provide guidance as to how inspectors could come up with their own marketing materials should they see fit.
  8. What makes you feel like referring party coverage is a scheme? Third-party coverage is actually really common. You see it in the real estate space all the time with builders, contractors, etc. It's present in other fields, too, like the medical field. All it's really trying to do is make sure that the person who actually did the work subject to the lawsuit is the one paying for the coverage. Because, chances are, if you don't do the same type of work as the party you're referring (or being referred by), you don't carry the right coverage. That's why we recommend you request additional insured coverage on the insurance of those companies to whom you refer business (i.e. termite company, roofer, etc.). Now, if you're uncomfortable with marketing to real estate agents generally, I can understand that. We insure quite a few inspectors who prefer to market their business to consumers rather than agents--some for ethical reasons others for economic concerns. (i.e. If the economy takes a turn, I don't want to be relying on realtors that go out of business.)
  9. Hi TIJ Readers! With 69 percent of home buyers nationally choosing their home inspectors based on their realtors' recommendations, it's no wonder why we see a lot of industry interest in bettering agent marketing efforts. Yet, few inspectors know that most home inspection insurance policies come with referring party indemnification, an endorsement that many real estate brokers see as a benefit. Teach your local realtors about your insurance policy's referring party indemnification coverage, and you may be able to improve your referral rate. You can learn more about referring party indemnification in our recent article, previewed below. Best, Stephanie How To Improve Your Marketability with Referring Party Indemnification During a recent home inspection, you missed the polybutylene pipes in the attic. When your clients, the home buyers, discovered your error, they were furious. They didn't just sue you; they sued everyone involved in the home's sale. That included the real estate agent that referred the job to you. What is referring party indemnification? In home inspection policies that include referring party indemnification, should there be a claim about inspection findings, the insurance company assumes liability for not just the home inspector but the referring party. If your insurer offers third party indemnification, your insurance policy will define referring real estate agents, real estate brokers, mortgage lenders, relocation companies, and other relevant third party referral sources as limited additional insureds. As such, these referral sources can receive insurance coverage from claims arising from your inspection services. Common conditions to these endorsements include: You and the referring party didn't give notice of the claim to another insurance carrier before your current policy began. The inspection related to the claim occurred on or after your retroactive date and before the end of your policy period. Before you started carrying insurance, you and your referring party couldn't reasonably predict that your clients were going to file the claim. The referring party reports the claim in writing to your carrier during the policy period. The claim doesn't involve any services the referring party performed independent of you, the home inspector. The claim is subject to your insurance limits. In addition to insurance carriers, some other companies offer referring party indemnification to home inspectors. Just like you do with your insurance policy, we recommend reviewing any referring party indemnification plan you intend to use to make sure you understand the terms. How can referral coverage improve my marketability? As a home inspector, Paul Stratton, Owner of Stratton Inspection Services, LLC in Arizona, finds that realtors worry about potential claims. Many are concerned that, if the home inspector they refer to the client misses something, they'll be liable. Stratton calms brokers' nerves by explaining that his insurance policy protects them, too. "Realtors want to know that they're covered and that their client is covered as well," Stratton told us in an interview for our article "How to work with more realtors." "[Referring party indemnification] gives them more peace of mind." [READ MORE]
  10. Hi TIJ readers! Recently, we did a free webinar with InterNACHI and with ASHI on understanding your insurance policies. The theme of the hour were common policy pitfalls: the fine print that leads many home inspectors to purchase less coverage than they actually need. This article highlights the top three pitfalls to watch out for. Enjoy! Stephanie 3 most common insurance policy pitfalls Did you know that not all insurance policies are created equal? Or that policies can exclude some business practices? If you don't know the ins and outs of your policy, you could end up buying less coverage than you need. In this article, we go over three of the most common insurance policy pitfalls plaguing the home inspection insurance industry. Look for these pitfalls when shopping or renewing insurance to ensure you're getting the coverage your business really needs. Your insurance carrier doesn't cover it. Exclusions are the portions of your policy that define what you are not covered to inspect. Some exclusions are permanent while others can be modified with an endorsement. (More on endorsements in the next section.) Exclusions allow the insurance company to offer more competitive rates by eliminating business practices that go beyond the policy's intent. Common non-endorseable exclusions in home inspection errors and omissions and general liability policies include: Asbestos Pollution Improper licensure Warranty claims To find out what exclusions lie in your policy, you've got to read it. And before you do, you should know whether your policy offers basic or broad coverage. Basic policies state what's covered, and anything that isn't listed is an uncovered inspection. These policies tend to be easier to read because they're shorter, but they often offer less coverage. On the other hand, broad policies offer more open-ended coverage than basic policies. If an exclusion isn't on the list, then it's automatically covered. These policies are a tough read but much more comprehensive. (In case you're wondering, InspectorPro offers broad policies.) Keep in mind that there are insurance carriers that advertise to property inspectors but explicitly exclude home inspection services in their policies. If you receive a quote for hundreds or thousands of dollars less than that of a specialized home inspection insurance provider, be sure to study the policy to make sure home inspections aren't excluded. [READ MORE]
  11. Great question, @Jim Katen. While finding the property after the fact is rare, it does happen, so most equipment coverage insurance policies have a section dedicated on what to do when you recover the lost or damaged property. You'd have to check your specific policy to be sure of the proper course of action according to your carrier. But, to get an idea, here's what it says about recoveries in our inland marine policy: So, technically, according the most equipment coverage policies, your recovered equipment and tools would be the property of the insurance company, and they should have the final say if they would like it back or if it's not worth the value to have you return it to them. It probably wasn't your insurance agent's place to dismiss it and advise you not to bring it up again; it should have been the insurance carrier and their claims adjusters' call. Additionally, if you're still working with that agent, you may want to consider how her counsel in this situation could reflect the quality of future counsel in the future and act accordingly. Hope that's helpful. If you have a current equipment coverage policy and are curious about its stance on recoveries, I'd happy to look it over for you, too.
  12. Hi TIJ readers! Hope you're all enjoying the summer inspection season. Our latest article was inspired by a question we that kept coming up at shows and on the phone: I know that E&O and GL can protect my business against claims. But is there a type of insurance that can protect my business from loss or damage to all the expensive equipment I use? The answer is yes. Equipment coverage, otherwise known as inland marine insurance or a property floater, is an add-on coverage that protects your tools and equipment. Check out the preview below to start learning what the coverage entails, how it works, and what happens when you have a claim. Best, Stephanie How to protect your tools and equipment Earlier this year, one of our insured home inspectors sent his radon monitor in for calibration. When the servicing was complete, the manufacturer shipped the monitor back to the home inspector. But, when the inspector returned home, the radon monitor was nowhere to be found. The inspector put in a claim with the radon monitor manufacturer, who subsequently put in a claim with the shipping company. Both the manufacturer and the shipping company denied any liability or coverage for the loss. So, the home inspector filed a police report with his county's Sheriff's Department and contacted us, his insurance provider, to see if we could cover the lost radon monitor. What is equipment coverage? Formally known as inland marine coverage or a commercial property floater, equipment coverage insures your inspection tools and equipment. Unlike standard property insurance, inland marine coverage protects your tools and equipment regardless of their location. This is important in the home inspection industry since, rather than housing your tools and equipment in an office, you usually have your materials in your work vehicle or on inspection sites. In most cases, equipment coverage for home inspectors reimburses you for the actual cash value (not the cost of the items brand-new) of your stolen or damaged equipment or tools. Oftentimes, coverage extends to not just items you own but items you lease or rent. Most home inspection tools and equipment are eligible for inland marine insurance endorsements. Examples of typical inland marine insurance claims include: Someone burglarizes your locked inspection vehicle and swipes your drone. As you're taking inspection photos, you trip and drop your digital camera, breaking the lens. While inspecting the roof, someone steals your infrared camera, which you left at the base of your ladder. Someone takes your leased radon monitor from where you left it overnight on the inspection site. While taking off, you lose control of your drone and crash it to the ground, damaging the wings and internal computer. Many equipment insurance policies cover physical loss or damage caused by perils, such as falling objects, fire, lightening, sink hole collapse, vandalism, vehicles, and water damage. To see what perils are and are not covered, review the Conditions and Definitions sections of your inland marine policy. How does equipment coverage work? Typically, equipment coverage is subject to your "schedule of coverages," which describes the property you'd like the insurance company to insure. Most insurance companies require that inspectors provide property descriptions?including the make, model, and serial number?for any items worth more than a certain amount. Here at InspectorPro, we require property descriptions for any items worth $500 or more. For any items worth less than $500, InspectorPro insureds may still cover the property as "miscellaneous tools" without providing make, model, and serial information for each tool. The only caveat is that miscellaneous tools cannot exceed $2,500 in total value. [READ MORE]
  13. That makes more sense. If your carrier is Scottsdale, your provider is OREP or Target. Commenting on Scottsdale/Nationwide is tricky because: they're pretty new to the home inspection insurance space (~2 years) their claims definition, responsibilities, etc. are pretty vague in their policy neither of their providers (OREP and Target) have really published on their claims handling practices But here are a few clues: Back in 2016, OREP's Senior Broker David Brauner did an article called "Insurance IQ" in which he talked about some of the highlights of their insurance coverage for appraisers. In it, he talks about how they offer pre-claim and claims help "through the carrier." If that's how they handle their appraiser book, it's likely that that's how they handle their home inspector book. (You can read his article here.) If you go to Target's website, it asks you to fill out a Claims Supplement form and submit it to either your agent or the carrier. If you have the option of sending it directly to the carrier, it's likely that you're submitting your claim to their in-house team. (You can see the claims page on Target's website here. Note that it doesn't look like they've updated the page since they switched to Scottsdale/National, so the Western Heritage carrier info is still on there.) It's more common to receive claims handling through the insurance company/carrier. So, if your insurance company hasn't explicitly talked about having a pre-claims or claims team separate from the carrier, they probably don't. So, if you're curious who handles your claims and how on your Scottsdale/National policy, I'd recommend contacting your provider directly. Some questions you might ask: Who provides my pre-claims assistance? What qualifies them to provide pre-claims assistance? And what help are they able to give me? Who handles my claims? How often do they look at home inspector-specific claims? And how long have they been adjusting home inspector claims? In case you're not sure who to contact, here are who I'd recommend talking to at each provider: OREP: David Brauner | 888-347-5273 | dbrauner@orep.org Target: Fausto Petruzziello | 862-286-3510 | FPetruzziello@targetproins.com
  14. InspectorPro Insurance's parent company is Citadel Insurance Services, LC. So, your carrier wouldn't be Citadel; that would still be your provider. However, in looking you up in our system, you don't appear to be a customer of ours. If you are curious about how your claims handling works with your current provider, we'd still be happy to help. You can email over a copy of your binder and/or policy to weprotect@inspectorproinsurance.com and we can look it over and let you know who your carrier is and what we know about their claims handling. Or, for a more direct approach, you can always call your provider directly and ask who handles your claims and how.
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