What To Expect if You Get an E&O Claim

Avoiding home inspection claims is the ideal scenario. Realistically, however, it’s uncommon for inspectors to go their entire careers without one. According to our data, more than half of home inspectors will have a claim filed against them at some point.

We include this statistic not to dishearten you, but rather to help you prepare mentally for the possibilities. Should you have to face a claim, knowing what the process looks like can help you respond quickly, calmly, and appropriately for a smoother resolution.

To set you up for success, we’ve outlined the general process you can expect to undergo while facing a home inspection claim.

Is it a claim? How can you tell?

Errors and omissions (E&O) claims come in many forms. The cause could be completely frivolous, like your client neglecting to read your report. It could be a misunderstanding about your scope. Perhaps your client’s having a hard time with their investment, and they want to pin their frustrations on someone else. Or, possibly, you made a genuine mistake—it happens sometimes, right?

Whatever the case, your client’s unhappy. So how can you tell if you’re facing a complaint, or if it’s escalated into an official home inspection claim?

Here at InspectorPro, we define a claim as a written demand for money based on an actual or alleged “wrongful act.” You might receive the demand through a formal lawsuit, an email, or a text. If a client makes a written or verbal demand for your insurance information, your insurance carrier may still treat that as intent to make a claim, even if it’s outside your policy’s definition. Therefore, if your client demands money or insurance information, then it’s safe to assume you have a claim on your hands.

So, you’ve received a home inspection claim. What happens first?

Report the situation to your insurance company immediately. If you’re insured with InspectorPro, you must file claims as soon as practicable but no later than 60 days after your policy expires. Requirements will likely vary for other providers, though. Read your specific policy to check for time expectations like these.

Not sure if it’s worth reporting? When in doubt, report it out. If you’ve been served—i.e., you’ve received the paperwork that formally notifies you of a lawsuit against you and your business—report it. If you haven’t been formally served, but you have a hunch that you’re involved in a home inspection claim, report it.

As an InspectorPro insured, there are zero fees for reporting. Reporting will not raise your rates or affect your coverage. On the contrary, many insurance companies have penalties for waiting too long to report a formal claim, like having the claim denied. Plus, when it comes to handling home inspection claims, time is of the essence. The more time you give us, the easier it will be to investigate, form a game plan, and resolve the claim efficiently. You have nothing to lose from reporting a complaint immediately and everything to gain from a fast response.

One benefit: If you report an incident early, and it doesn’t turn into a claim later, our team will step in to stifle the complaint at no cost to you. Even if it does escalate into a claim, having earlier documentation will allow us to jump in and plan an efficient response right away. Here at InspectorPro, this pre-claims assistance program comes free with most of our policies.

How do you report a home inspection claim?

There are a few different ways to report a claim with InspectorPro. The easiest avenue is to call or email your broker. At this point, don’t worry about having every document on hand. Rather, just focus on reporting quickly. Tell your broker that you have a claim or potential claim and provide a summary of what’s going on. Your broker will then forward those details to our claims team.

Alternatively, you can:

• Call us at (866) 916-9419
• Send an email to iproclaims@citadelus.com, or
• Fill out a contact form on our website here.

Expect a Call from the Claims Team

You’ve told us about the conflict. Next, our team will assign a claims adjustor to your case. An adjustor is a person who investigates insurance claims, determines the extent of insurance coverage available, coordinates your defense, and participates in any negotiations. On weekdays, your adjustor will call you within 24 hours of receiving your claim—perhaps even that same day. Be ready to answer the phone or reply promptly.

During this call, your adjustor will ask questions to better understand the situation. Afterward, in a follow-up email, they’ll recap your conversation and ask you to send any materials they need from you. Typically, this will involve items like your:

• Inspection report
• Pre-inspection agreement
• Photos
• Demand letter (if there is one)
• Description of the complaint
• Any email or text correspondence

Simply put: Send your adjustor anything you have. Even if it seems repetitive or unhelpful, send it anyway. And, most importantly, be open with us. The more information we have up front, the more effectively our claims team can plan for your defense. Withholding information, on the other hand, can adversely impact the investigation.

We’ll take it from here.

Once you’ve sent us the necessary information, InspectorPro’s claims team will take over the day-to-day work of your defense. You don’t need to talk to the claimant or hire local counsel. In fact, we discourage you from talking or writing to the claimant or their attorney, promising them anything, or signing anything they send you. Instead, if they contact you, forward or report that communication to your adjustor. We’ll thoroughly investigate, communicate with the claimant and their attorney, and give you relevant updates to keep you in the loop. Behind the scenes, we’ll handle everything to reach a resolution that’s in your best interests.

The claims process can become complicated and may take a while to resolve. Fortunately, from our inspectors’ points of view, the process is relatively simple. You’ll never have to worry about what to do next. If you need to get involved, your adjustor will tell you.

As one of our insured inspectors, the biggest thing we need from you is your full cooperation. Be honest with us. Attend any hearings or trials we ask you to attend. Do not admit any liability, assume financial obligation, or pay the claimant without our prior, written consent. Should you do so, you may be held responsible for any financial outcomes. For more details, refer to Section VIII. “Other Provisions Affecting Coverage” in your policy’s professional liability coverage form.

You’ve reported the claim. What happens next?

Now that your home inspection claim is in our hands, the journey can go in a few directions. Claims vary in timeline, method of defense, and method of resolution. For example, at any point, the parties may agree to an alternate dispute resolution method, such as:

• Mediation: During this process, a neutral, third party, known as the “mediator,” helps negotiate a settlement. The mediator meets with both sides privately and talks them through the strengths, weaknesses, and risks of their respective cases. Though the mediator will recommend a solution, the parties are not required to pursue that solution; it’s non-binding.
• Arbitration: Like mediation, arbitration happens when a neutral, third party gets involved. In this circumstance, however, this party is called the “arbitrator.” And, while the mediator does not have the authority to force a settlement, the arbitrator’s decision is final and binding. This procedure acts like an abbreviated and less formal trial. Both sides present their evidence and the arbitrator makes a verdict.
• Settlement: A settlement is when the parties end the dispute by agreeing to specific terms. Examples include payment from one party to the other or agreeing to drop the claim altogether.

Claims don’t follow one strict, linear procedure. For that reason, it’s important to be aware of these alternatives from the start. Mediation, arbitration, or a settlement could come up throughout the claim’s life, regardless of whether a lawsuit has been filed. While they may not lead to a final decision, they can make things simpler and more cost effective for both sides.

Another consideration that affects the roadmap of a claim: whether it’s suited or not suited.

Not Suited

A claim is considered “not suited” if the claimant has not filed their demand with a court.

With a nonsuited claim, your assigned adjustor will contact the claimant or their attorney to figure out exactly what they’re demanding. Second, they’ll send a response to the claimant. Next, our claims team will launch their investigation. After reviewing your inspection materials and standards of practice (SOP), they’ll send a response to the claimant retaliating against each of their allegations.

From here, if the claimant accepts the response, the claim closes. Alternatively, the claimant could contest the settlement, prompting further negotiations; or, the claimant could file a lawsuit.

Suited

We refer to a claim as “suited” if the claimant files their demand with a court. This officially pushes the claim into litigation. While it varies slightly by state, the basic court process in a suited claim unfolds through these steps:

1. Complaint
   

   One party—the plaintiff—initiates a lawsuit by filing a complaint with the court.

2. Summons
   

   Next, the summons takes place when the court notifies you, the defendant, of the lawsuit.

3. Answer
   

   After you’re notified about the complaint, you get a limited amount of time to respond. Our claims team will prepare an answer stating your perspective in the dispute.

4. Reply
   

   In some cases, the plaintiff’s team responds to the defendant’s answer. Sometimes, instead of answering or replying, one side asks the other to correct factual errors. They may even file a motion asking the court to dismiss the suit—in part or in its entirety. For example, we might ask the judge to dismiss the case because you aren’t at fault. Or your claimant might request the judge moves the case to trial. Alternatively, if both sides aren’t willing to agree to a different dispute resolution, then one party could file a motion asking the court to compel—or force—mediation or arbitration. It all depends on your claimant and our plan to defend you.

5. Discovery
   

   If the parties haven’t reached an agreement yet, they’ll prepare for the trial through discovery. The American Bar Association (ABA) defines discovery as “the formal process of exchanging information between the parties about the witnesses and evidence they’ll present at trial.” Through depositions, subpoenas, and other forms of record sharing, discovery intends to give both parties a fair idea of what to expect from the opposing side, preventing a “trial by ambush,” ABA writes in the previously linked post.

6. Trial
   

   After discovery, the case appears before a jury or judge. Both sides have the opportunity to give opening statements, or an overview of the facts they plan to present. Then the parties call forward and interview witnesses. After the defendant (you) and plaintiff (your client) present evidence and witnesses, you both make a closing argument, summarizing the strongest points in your respective side’s case. Finally, the jury will reach and write down their verdict, which is passed to the court clerk and read out loud. Talking at a trial can be nerve-wracking for those who’ve never done it before. Thankfully, if your claim goes to court, our claims team will help you prepare any necessary responses before you need to speak. Moreover, they’ll mostly speak on your behalf.

Final Step in Your Home Inspection Claim: Deductible

Once the claim has ended, all that’s left is to pay your deductible. You can expect to pay your deductible if our team needs to pay a monetary settlement or hire outside attorneys. Otherwise, the claim will likely close at no cost to you.

You won’t always need to pay a full deductible. In fact, here at InspectorPro, we offer several discounts to reward our insured inspectors for their helpful teamwork. While covered with us, you can pay as little as $0 when you combine the following discounts:

1. The early reporting discount encourages you to report potential claims quickly by reducing your deductible up to 50 percent.
2. The diminishing deductible endorsement rewards inspectors for consecutive years without claims with up to 50 percent off your deductible.
3. If you’re using one of our model inspection agreements as directed, we’ll lower your deductible by an additional $1,000.

We Protect. You Inspect.

Home inspection claims are tough, but they don’t have to damage you and your business. By purchasing E&O coverage that fits your unique business needs, and by taking advantage of your deductible discounts, you can have peace of mind when frivolous (or legitimate) allegations strike.

Not insured with us yet? Apply now to receive a no-obligation quote and start receiving benefits like a diminishing deductible, pre-claims assistance, and model inspection agreements.

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• Pre-Claims Assistance: | How your insurance can help you avoid a claim