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As Real Estate Market Declines Home Inspectors Should Keep A Strong E & O Insurance Policy
There is no denying that we live in a lawsuit hungry environment. It seems that people can find a wide assortment of reasons to sue a company, an individual, or both. As the overall real estate market has declined in recent years the number of lawsuits involving land and home transactions has increased. It seems that no one is safe in these lawsuits either. Realtors, mortgage brokers, appraisers and home inspectors have all come under the gun for deals that went bad. This is one of the main reasons that the number of E & O insurance policies has been on the rise in the past few years.
More Than Just Protection Against Mistakes
Some home inspectors and realtors are under the impression that E & O insurance, also called errors and omissions insurance, is designed only to protect a professional in the event that the professional truly makes a mistake in their work. However, this is not so. A sound policy will also have a provision for legal representation. Since attorney fees, court fees and the cost to try a case can all be quite expensive the E & O insurance ...
... policy can help offset these costs.
Numbers on the Rise
Carriers that offer the E & O insurance have seen an increase by as much as 10% of the professionals choosing to carry a new policy. The policies are priced according to the area of the country where the professional works. The number of claims or transactions in a particular area will usually dictate the price of the policy similar to the way automobile policies are priced.
Many realtors have the option of working with a large franchise that may offer some type of insurance policy as part of the franchise agreement. Obviously this type of policy will not only protect the realtor but also the good name of the franchise in the case a lawsuit is brought to court. However, the majority of home inspectors do not work with a franchise. Most of these people work on their own and are left to their own devices. That is why it is important for these professionals to consider getting a solid errors & omissions insurance policy.
Impact of Current Market Trends
Home inspectors need to be especially tuned in to the trends and actions in their local market. Based on a recent report about 20% of all homes are valued below their current mortgage. Inspectors should take care to follow through completely on any sale and make sure they have done a sufficient job of inspecting the property to avoid a lender or realtor of accusing the inspector of pointing out a defect that may drive the home’s value even lower.
While it is true that people can file a lawsuit for any number of reasons it does not mean that the lawsuit will carry any weight. Many suits are dismissed based on tiny details and only cause a home inspector worry without any real financial hardship. However, it is still a wise idea to get a E & O insurance policy just as a precaution against any mistake that could be turned into a costly legal battle.
Larry Chandler is a freelance writer for Elite Inspect Insure, a provider of E & O Insurance for home inspectors. To find out more about their errors & omissions insurance offering visit their website at Eiipro.com.
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