Debunking Common Myths About Reporting Claims Part 1: Addressing Experienced Home Inspectors’ Questions

“Is this worth reporting to my insurance company? How can I save on insurance costs?”

You’ve probably seen an inspector ask these questions. Perhaps you, too, have posted them on social media.

We see them all the time. Understandably, it’s difficult to know when something is “worthy” of a call to your insurance. To make matters even more confusing, the emotional and financial benefits of timely reporting are sometimes overshadowed by the anxieties you, the inspector, might have. 

Some inspectors use these anxieties to rationalize their way out of it. Common myths about reporting claims include:

• I should only inform my insurance if the conflict seems like a big deal.
• I’ll get more efficient claims handling if I resolve the claim on my own.
• Reporting insurance claims promptly means I’ll have to pay my deductible. If they aren’t demanding a lot of money, it’s easier to pay the demand out of pocket and avoid my deductible.
• If I report this to my insurance provider, they’re just going to raise my premium.
• Insurance companies are only looking for a quick buck. They won’t fight for me. I should take care of this complaint by myself so I can fight to the end.

Misunderstandings like these circulate fast and often. But they’re just that—misunderstandings. Heeding them can prevent inspectors from saving money on insurance and maximizing their insurance benefits. Furthermore, it could stop you from making the most of your claims handling resources—or worse, jeopardize your insurability.

In this two-part series, we’re dispelling common insurance myths about reporting claims. We’re also breaking down how reporting claims prevents future problems. Let’s kick off the series with myth one: that “small” incidents don’t need to be reported.

Myth #1: You only have to report the “big” stuff.

Some inspectors have circumstantial feelings about reporting conflicts, explains Dirk Houglum of D & P Home Inspection in Florida. They’ll ask themselves if a claim is serious enough to warrant reporting. To determine this, they’ll consider:

1. How upset the client is.
2. If the inspector can get a smooth claims resolution by themselves, or if it will go away on its own.
3. How much money the client demands (in other words, if the inspector can pay out of pocket).

“When I fell off the roof and broke my arm, everything was handled with workers’ comp. I didn’t have to deal with anything. I would definitely have my insurance company called right away on that. But if it’s something that I can take care of in-house, I definitely would take care of it before [calling my insurance],” Houglum said. “As a small business, it’s really hard to determine, ‘Does this justify me putting in this claim? Or am I better off to just suck it up and put it on a credit card for now, or take it out of my savings?”

We understand your desire to resolve disputes solo. You’re operating a business; you want to make things right so clients leave happy. As such, if a demand for money doesn’t seem that expensive, or the client seems cooperative, you worry that contacting your insurance company will make things worse. Saving money on insurance is a priority, too.

And, yes, there are ways to handle these stressful situations tactfully. However, that should always be in tandem with timely claims reporting—not in place of it. Realistically, trying to resolve the seemingly-small issues while excluding your insurance can present a number of serious problems down the road. Here are five pitfalls that can occur when you try to resolve claims on your own.

1. Complaints escalate fast.

First, let’s explore something the common myths about reporting claims don’t acknowledge. Disputes may seem straightforward at first. Unfortunately, they can quickly escalate and become more complex as inspectors start digging. 

For example, you promise to replace a $500 dishwasher or fix a $1,000 defect. But repairs unveil more issues beneath the surface, and the client expects you to foot that bill, too. That $1,000 fix is now $5,000, and you’re dipping into your savings for something that was outside your scope. 

You report to your insurance. Now, after so much time has passed and promises have been made, you’ve missed out on the benefits of an early claims resolution. Your client is more upset. Fighting it will be more expensive and trying than if you’d reported to your insurance from the get-go. 

2. They rarely go away on their own.

Second, if a client’s complaint doesn’t seem serious, you might be tempted to ignore it. You might wonder: “What happens if I don’t report a claim?” After all, their issue isn’t a big deal. It should go away on its own, right?

Sadly, that’s rarely ever the case. Clients aren’t leaving harsh voicemails, accusatory reviews, or upset emails to make you a better home inspector. If they have an issue with your inspection, they expect you to do something about it. Even if it goes away at first, we often see these incidents escalate even one or two years down the road. The resulting can of worms can have dire consequences.

3. Failing to report claims puts your coverage at risk.

One key reason why you should never ignore a complaint or try to exclude your provider: It risks your insurability and coverage.

Here’s why this common myth about reporting claims often proves detrimental. Your insuring agreement outlines terms for giving notice of a claim. At InspectorPro, we ask our insured inspectors to “notify us in writing as soon as practicable.” What is the time limit for reporting insurance claims? For us, it’s no later than 60 days after your policy has ended. If you aren’t insured with us, be sure to check your own policy’s terms, as they may differ. 

If you exclude your insurer because you don’t want claims-related expenses, like increased premiums, you’re also breaking your insuring agreement’s terms. This can initiate two outcomes:

1. Your insurer can still cover you for the claim you didn’t report effectively. However, their defense is compromised. They’ve had less time to investigate and pacify the upset client, who’s had time to grow even more frustrated. What’s worse, a dragged-out claim is more expensive and arduous to resolve.
2. You can lose coverage for the claim you didn’t report effectively, per the terms of a claims-made policy.

By comparison, prompt reporting helps with streamlining the claims process. It promotes a better prepared and informed defense team, faster and less expensive resolutions, possible discounts, and no jeopardy to your coverage. Read more about the practical and financial benefits of timely reporting here.

4. You aren’t a claims-handling expert.

Specialists like yourself are highly talented and knowledgeable about their field. You live and breathe home inspections; it’s your life. That’s why it frustrates experienced home inspectors when the buyer’s dad tries to point out defects during the walkthrough. The dad isn’t a home inspector. He doesn’t have the training, expertise, or wealth of insight you’ve spent years cultivating. 

The same goes for handling upset clients and claims on your own. One of the most common myths about reporting claims is that it’s easier to tackle incidents solo. But you’re a home inspector, not an attorney or a claims-handling professional. Just as our claims team wouldn’t inspect a home, we wouldn’t ask you to navigate a demand for money without insight from our team. 

5. It’s difficult to separate emotions.

Some inspectors expect smooth sailing when dealing with upset clients on their own. Expertise isn’t the only issue they overlook. You also need to factor in emotions.

Many of us like to think, “I don’t get emotional. I always keep my emotions separate, no matter how heated a conversation gets.”

Science and our own experiences, however, indicate otherwise. Baba Shiv, a Stanford Graduate Professor with a neuroscience background, says emotions shape about 90-95 percent of human decisions and behaviors. Emotions direct our actions constantly and automatically. It’s a survival mechanism; how we as a species adapt to ever-changing stimuli and stay connected to other people around us.

But when it comes to cost-effective and efficient claims handling, emotions don’t always work in our favor. For example, a buyer, seller, or agent crying or yelling about an inspection is going to trigger an emotional response from you. Contrary to many common myths about reporting claims, this can make it difficult for you to adequately separate yourself from the complaint. 

Our claims team observes that inspectors typically respond in one of two ways:

1. They become excessively sympathetic and generous. As a result, they feel uncomfortable asserting their lack of liability. They offer to pay for something entirely outside their scope. Then, they forget to have clients sign a release from all potential claims that could arise from that inspection. They might admit fault for an error that isn’t their fault. Sympathies and moral convictions cloud their judgment, which gets them taken advantage of.
2. Alternatively, some inspectors become overly rigid. Perhaps they lose all empathy and, in an effort to shut things down, become angry, defensive, or dismissive. This, in turn, upsets clients even further.

Pair either scenario with lack of claims handling expertise, and the outcome doesn’t bode well for inspectors. 

The Solution: When conflicts arise, exercise timely claims reporting and make the call.

To protect yourself, your business, and your clients from stressful, drawn-out, expensive conflicts, don’t heed the common myths about reporting claims. Instead, remember this: It’s important to loop in your insurance provider as soon as possible.

Don’t try to navigate these convoluted waters alone. Lean on our specialized knowledge for smooth claims resolutions. Our claims team works with home inspection clients every day. We utilize top strategies for insurance cost management in your industry’s unique claims. Let us be the “bad guy.” In turn, you can focus on what you do best: inspecting homes.

Not to mention, if your provider offers pre-claims assistance like ours, there’s absolutely no harm in reporting complaints before they become claims. With our free pre-claims assistance for inspectors, you can still handle the conflict in-house. Our experts will advise you to communicate in a way that minimizes your liability. Plus, our insurance carrier isn’t informed unless it escalates into a full-fledged claim. It’s truly the best of both worlds.

In many cases, having early notice before a claim fully evolves means we can shut it down at no cost to you. If it does turn into something more serious, you get opportunities for saving money through early reporting. Our inspectors can often bundle multiple discounts—one just for using our pre-claims assistance. 

When paired with our model inspection agreement and diminishing deductible discounts, InspectorPro insureds can even reduce their deductibles down to $0. We discuss how pre-claims assistance works in our guide here. Not currently insured with us? Fill out our online app. We’ll connect you with a team member to discuss how preventing and handling claims stands out with an InspectorPro policy.

Join us for part two next month, where we’ll debunk even more insurance misconceptions about reporting claims. Stay tuned!

Related Posts

• Handling THAT customer: |How to answer a customer complaint against your home inspection business
• How to save money by reporting claims early
• Pre-Claims Assistance: | The FAQs
• Release of Claims: | A Contract to Limit Home Inspector Liability