> E&O/GL Insurance for Home Inspectors Competitive Rates, Broad Coverage, Free Risk Management, online inspection support for tough questions, discounts on education and more… Professional Coverage, Competitive Pricing Shop OREP today!

Editor’s Note: This story appears in Working RE Home Inspector’s Summer 2018 Print Edition. OREP insureds enjoy it free along with many other business and risk management benefits! WRE reaches 20,000+ Home Inspectors in Print and Online!

Risk Management Corner

By David Brauner, OREP.org Home Inspector E&O Insurance

What does a very specialized cancer surgeon have in common with you and your home inspection business? It turns out, quite a bit when it comes to setting proper expectations for patients and clients.

In his TED Talk (Google it), renowned cancer surgeon Kevin Jones talks about two qualities he believes are important to every doctor: humility and curiosity. Humility, he says, to stave off overconfidence, and curiosity, which he sees as the key to continual improvement. I believe these qualities are important in managing risk for home inspectors as well. Why? Read on!

Jones shares the story of a colleague who after a difficult surgery to remove cancer told his patient, “I got it all and you’re good to go.” A few months later, Jones says, it was clear that his colleague had not gotten it all and that his patient was not good to go. As a result, his colleague was too “embarrassed” to continue with the patient he felt he had let down, even though he made no “mistake” in the surgery. He asked Jones to take over the patient’s care, which he did. After a more radical surgery, Jones says he told the patient, “I most likely got it all and you’re most likely good to go.”

Here is the heart of the matter for Jones and for us. That simple qualification (the words most likely) may seem small but setting realistic expectations is not an insignificant matter either for doctors or home inspectors. In his talk, Jones advocates that doctors leave a little room for uncertainty when discussing outcomes with patients; to avoid overconfidence and to acknowledge room for error. That’s not bad advice for home inspectors too.

What the good doctor is really talking about is what every good businessperson already knows: setting proper expectations is vital to customer satisfaction. For home inspectors, it is most definitely a key risk management strategy. Setting proper expectations has another benefit: it makes you far less likely to be sued when there is a disappointing outcome of any kind—related to your health or your home. Avoiding complaints is what risk management is all about because even if you do nothing wrong, facing a claim or complaint can be agonizing and costly.

(story continues below)

(story continues)

Walking the Line
We know that people generally respond favorably to confidence and sometimes more favorably to overconfidence. This is true when selecting a surgeon or a home inspector. But the wisest business people make it a habit to under promise and over deliver. When “selling” the client on your services, overconfidence might be a good strategy for closing the deal but it has a downside. If expectations are set too high, when there is an unfavorable outcome you can bet that trouble will follow. If expectations are reasonable, the chances of a frivolous claim are minimized—at least when dealing with honorable folks. Additionally, if you acknowledge that you are not perfect, you will be more mindful and likely to catch a mistake before it can hurt you and your business.

So the formula for success is to express your competency and expertise while also acknowledging the honest limitations of your (any) inspection report. I’ll say it again because repetition works: setting proper expectations is one of the keys to minimizing risk. You need to develop a style that you are comfortable with for selling your services and explaining the limitations of your craft. In this way you are just like doctors.

Your clients should understand that the report is not a home warranty or guarantee that every little thing, seen and unseen, is working correctly and will continue to do so for months or years into the future. It is a snapshot of what is visible on the day of the inspection. You must follow an accepted scope of work. Your scope of work and inspection agreement should be tailored to you, your services and your geographic location. There are volumes written on this topic. OREP provides free risk management bulletins to its E&O insureds on these topics. For now, here are a few bullet points to consider.

• Set proper expectations by following a recognized scope of work set forth in a professionally drafted inspection agreement tailored to your business. E&O provider OREP offers insureds access to a personalized pre-inspection agreement drafted by an industry expert (at a discount). This is the number one risk management tool.

• Use a good reporting system—more about this in future stories.

• Limit the extraneous chat during the inspection that can undermine what is in the report. For instance: calling out a potentially serious issue in the report but casually minimizing it during the walkthrough, such as: “Oh, don’t worry about it. It’s not that big a deal.”

(story continues below)

(story continues)

• Take lots of digital pictures for your own protection. Conditions change after the inspection. A good picture that shows the condition at the time of the inspection has the potential to shut down a frivolous claim in its tracks.

• Respond carefully to complaints: If you have E&O, report any and all complaints to your carrier at once to protect yourself and to get professional assistance (search “Claims Made Insurance” on WorkingRE.com for more on this topic). OREP insureds are provided free pre-claim assistance. Premiums typically are not affected by reporting a problem, unless and until there is a cost to the carrier. Even then, premiums do not always rise, depending on the carrier and the expense. Don’t implicate yourself or make things worse by trying to resolve the issue on your own. Let the experts handle it. If you don’t have E&O, hire counsel who is experienced with home inspector issues. If you try to handle it yourself, you are risking making things worse.

• Don’t sweat the small stuff. Many of the smaller complaints are really home warranty issues, not E&O claims. Consider providing a low-cost, short-term home warranty with your inspection that will handle much of the small stuff for you— like appliances and the furnace/AC. Providing the added bonus of a free home warranty to your clients is also a good marketing tool. OREP insureds enjoy a discount on 90-day home warranties provided by a best-in-class home warranty company (www.OREP.org/warranty). They handle warranty-related issues for you, so you can concentrate on inspecting. OREP insureds save on the purchase of these warranties which are very low cost and can be added to the price of your services.

• Provide a good inspection report. More on this in future issues. For now, get the education and training you need to be competent. Use good products and never stop learning through continuing education. If you don’t know an answer, never bluff, always ask and furnish the right answer. OREP provides its insureds with free and discounted education and sponsors InspectorAdvisor.com, which is an online service that provides expert answers on demand to tough inspection questions. This service is free to OREP insureds and $59 to others.

So, to repeat the good doctor’s prescription for a better outcome in business: be humble, be curious and be careful!

About the Author
David Brauner is Senior Broker at OREP, a leading provider of E&O Insurance for home inspectors and other real estate professionals in 50 states (OREP.org). He has provided E&O insurance to home inspectors for over 20 years. Contact him at dbrauner@orep.org or (888) 347-5273. OREP–Organization of Real Estate Professionals Insurance, LLC. Calif. Lic. #0K99465.

Free Risk Management Online Course
Claims and Complaints: How to Stay Out of Trouble
Available Now
Presenter: David Brauner, Senior Insurance Broker OREP
David Brauner, Senior Broker at OREP, shares insights and advice gained over 25+ years of providing E&O insurance for inspectors, showing you how to protect yourself and your business. Watch Now!

Note: The Summer 2018 issue of Working RE Inspector mailed to over 20,000 home inspectors nationwide. OREP Insureds enjoy guaranteed delivery of each print magazine and many more benefits.