GET INCORPORATED!!!!!!!

[Doug Clark]

I did an inspection for a couple buying a home from an estate. The only other person with me was the attorney representing the estate. I went into the crawl space through an access hole in the floor of the garage. While I was in the crawl space the lawyer walked into the garage and stepped into the hole and broke his arm in 4 places. His last words to me as he left for the hospital were, "You should have told me that was there."

I do not have professional insurance, so the attorney (who hired an attorney) contacted me for my homeowners insurance. I could write a hundred pages describing the various facets of the case, and why I am not liable, but you'll have to trust me on that. My homeowners insurance agreed that I was not liable and denied the claim.

The attorney then filed a lawsuit against me. When I talked to my insurance company lawyer he informed me that insurance companies settle 95 to 90% of cases out of court because it's too scary for them to put the matter in front of a jury. In other words, they'd rather pay something on 95 out of a hundred cases heard by a mediator because a jury with a wild hair is too frightening for them to deal with. My insurance company is a standard bearer because they settle, on average, in only 90 to 95% of cases.

In other words, if somebody files a lawsuit there is a 90 to 95% chance they will make money!

I thought I had a company in my corner who would fight for me (and for themselves) -- that's what my agent and broker and claims adjuster and everybody else I talked to led me to believe. But when it came down to it, the attorney was openly planning to settle from the moment the paper hit his desk. The only question is how much they're going to pay.

If something happens, you will get sued, and it doesn't matter if you're right or wrong, the insurance company will settle and pay out money. I have good insurance so I won't pay a dime in legal representation or a settlement. But my rates will go up and I will pay through the nose in the future.

HERE'S WHAT I REALLY WANT TO SAY: Every attorney I talked to said the same thing: If I was incorporated they could sue me for $10 million and the only thing they could legally take are the assets of my business -- a laptop, a ladder, a camera, a flashlight, a pair of gloves....you get the picture.

SO LEARN FROM MY MISTAKE AND GET INCORPORATED!!!

[Erby]

My attorney advice disagrees with yours.

Your corporation is legally responsible for the actions of the corporation.

YOU are legally reponsible for YOUR actions.

i.e,

If I am a multi inspector corporation and one of my inspectors screws up.

The corporation can be sued.

That inspector can be sued personally.

If I am single inspector corporation and I screw up.

The corporation can be sued.

I can be sued personally because I was the one who screwed up.

Any one else???

[Scottpat]

Doug, you need to get General Liability coverage. It is too inexpensive not to have and if you are in any type of business that deals with the public it is silly not to have it.

[kurt]

Originally posted by Erby

Any one else???

Me.

The corporate veil is easily pierced in this situation. The cost of defense alone means you're going to settle with guy, corporation or not.

[qhinspect]

Originally posted by Erby

My attorney advice disagrees with yours.

Your corporation is legally responsible for the actions of the corporation.

YOU are legally reponsible for YOUR actions.

i.e,

If I am a multi inspector corporation and one of my inspectors screws up.

The corporation can be sued.

That inspector can be sued personally.

If I am single inspector corporation and I screw up.

The corporation can be sued.

I can be sued personally because I was the one who screwed up.

Any one else???

Get Inc or LLC depending on what your lawyer tells you (not what you accountant tells you). Once you formed your business entity, then you work under that entity. Anyone can sue anybody, but if they try to sue you personally when working under that entity, your lawyer can get it dismissed quickly. This is true for Indiana but every state has different laws so find a good lawyer in your area and pay him some money so you can save more money. It's a good investment.

I'll repeat what Scott already wrote: Get General Liability Coverage! It's too cheap not to have.

[Tom Raymond]

Incorporating in NY will run about a Grand, not to mention the tax implications. I can buy a whole lot of GL for a Grand. BTW, don't advertise how much insurance you have, no sense letting the slime know in advance what they might settle for.

If you really want to reduce your exposure, don't take an attorney as a client.[]

Tom

[Jim Morrison]

Two things:

1) Listen to other inspectors, but don't follow their advice blindly. Anyone who takes a home inspector's advice on a legal issue deserves what he gets...good and hard.

2) That said: If I had it to do over again, I would not have incorporated. Too much expense, too little protection.

[qhinspect]

I went with the LLC. Due to my wife working in the legal field at the time, she was able to set me up for about 1/2 the normal cost. Even though I saved around $375 at the time, to pay a lawyer the full amount to set that up would still have been worth it.

Inc is also around $1000.00 around here to set up.

My wife is the brains in this family.[:-graduat I'm just here to satisfy her in bed.[:-bigeyes

[Mark P]

When I started I went to a lawyer and he suggested a Sub S Corp. Since I've never had any leagl problem I can't say how much protection it wil actualy provide. But as far as expenses I get pretty pissed everytime my company has to: payroll tax, unemployment tax, and a few other's that escape me at the moment. In all fairness there are benifits too, but the extra paper work and expenses are real.

[Eric B]

I'm in the middle of an insurance claim right now, first in 15 years. Normally I would have disputed the client's claim but he's a plaintiff's attorney - he chews up and spits out people like me for a living. He was coming up with some large bills for repairs so I turned it over to my carrier who's attorney agreed that my report did cover the conditions. But rather than take the chance that the client would get nasty they are going to settle for an amount that would have taken me some time to save up for if I was paying it.

If I had tried to tackle this myself, the carrier would not later cover me if my effort failed - policy requires that I bring them in from the get go. I don't like to think about whether being incorporated would have have protected my personal assets or not. It wasn't worth risking.

So while it's common practice, and I think it stinks, people get paid off to go away, even if you're in the right. Now I'm hoping my premiums don't change.

[Scottpat]

Originally posted by Eric B

I'm in the middle of an insurance claim right now, first in 15 years. Normally I would have disputed the client's claim but he's a plaintiff's attorney - he chews up and spits out people like me for a living. He was coming up with some large bills for repairs so I turned it over to my carrier who's attorney agreed that my report did cover the conditions. But rather than take the chance that the client would get nasty they are going to settle for an amount that would have taken me some time to save up for if I was paying it.

If I had tried to tackle this myself, the carrier would not later cover me if my effort failed - policy requires that I bring them in from the get go. I don't like to think about whether being incorporated would have have protected my personal assets or not. It wasn't worth risking.

So while it's common practice, and I think it stinks, people get paid off to go away, even if you're in the right. Now I'm hoping my premiums don't change.

Just about three weeks ago, I recommended to an attorney who was defending a home inspector that they should consider settling. Not because the home inspector screwed-up all that much but because the inspector left a couple of doors open in his reporting that could have cost them a ton more if it went to court and a jury.

I know that inspectors never really want to hear the word "Settle" but many times it is the best thing to do. You, never know what a jury or judge will decide.

[qhinspect]

Originally posted by Eric B

I'm in the middle of an insurance claim right now, first in 15 years. Normally I would have disputed the client's claim but he's a plaintiff's attorney - he chews up and spits out people like me for a living. He was coming up with some large bills for repairs so I turned it over to my carrier who's attorney agreed that my report did cover the conditions. But rather than take the chance that the client would get nasty they are going to settle for an amount that would have taken me some time to save up for if I was paying it.

If I had tried to tackle this myself, the carrier would not later cover me if my effort failed - policy requires that I bring them in from the get go. I don't like to think about whether being incorporated would have have protected my personal assets or not. It wasn't worth risking.

So while it's common practice, and I think it stinks, people get paid off to go away, even if you're in the right. Now I'm hoping my premiums don't change.

I have a client that is sueing me and seems like everyone else. The things she is sueing me over are silly so I informed my insurance company (Allen Insurance) and gave it to my local lawyer.

[SonOfSwamp]

Pardon my joining in, but best I know, it works like this: You (the generic "you") can run a sole proprietorship, an S Corp., an LLC or anything else. But you can still get sued right down to your toothbrush.

The closest thing you'll ever have to a magic talisman is your own efforts at attending to details, doing things right, keeping excellent records and generating what Charlie Wood used to call the "I Love Charlie Factor."

Put very simply, you've just got to not screw anything up.

WJ