When a home inspector gets sued, several things tend to happen. At first, the inspector is often dumbfounded; did he miss something on the inspection? Well, the Client apparently thinks so! But, what happens next?
Well, if the inspector carries professional liability insurance, such as an Errors and Omissions policy, the inspector may need to immediately tender the complaint to his carrier. Depending on the coverage and terms of the policy, the inspector may be on his/her own at that point, or may relinquish all rights to their insurance company.
Sometimes, if the carrier feels there is risk, or that the costs of defending the claim may be high, they will often offer a settlement. Sometimes that settlement comes from the inspector’s deductible. In essence, the inspector loses, and never gets to tell his or her side of the story.
Where the inspector has no E&O, they may try to contact the Client and see what the dispute is about. In some cases, the inspector may offer to take care of a problem, or may offer money to make things go away. Sometimes this works, but often the inspector retains an attorney, at an hourly rate. Bingo… the legal bills start to pile up.
But, what if there was another way to resolve disputes… say via an alternate dispute resolution service? We’re speaking of mediation and arbitration. Well, in order to take this path, both parties would need to agree to it. This is why if you intend to compel arbitration and mediation, it is imperative that it be included in the inspector’s inspection agreement, and clearly agreed to by the client prior to the start of the inspection.
To ensure a fair outcome for both parties in the dispute, it is equally as important to choose an arbitration firm that specializes in the home inspection industry. Not fair, you say? There will be bias in favor if the inspector? Well, in reality the knife cuts both ways. Inspectors and those intimate with the industry know what performing an inspection legitimately takes and includes. It’s hard for either party to embellish the facts with any degree of believability when an expert neutral is involved.