Missouri Homeowners/Business Insurance and the Roof

 

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     There are basically two kinds of roofs on Missouri homes and business structures.  There are those that have storm damage and those that will have storm damage.  Understandably, the various insurance companies from all over the country that sell policies in our state will offer a wide variety of coverage options that are not always or fully understood by the property owners before disaster strikes.  

     Learning after the roof has been damaged that you have been saving pennies per year by NOT including coverage to match replacement shingles or siding, or learning that hail dents that destroy the appearance of your metal roof is not considered “damage” by your insurance company, can result in costly out of pocket expenses that you thought were covered by insurance.  

     The Missouri Department of Insurance has created an informational and interactive website that helps you to generally understand your roofing coverage for each insurance carrier.  While I recommend that you visit their site, I urge you to take the time to actually read and understand your insurance policy, as well.  Have your agent clearly explain to you, when necessary, what it does and does not provide and ask lots of questions.

     Considering that when an insurance company’s claims department is on its very best behavior, its job is the same as any corporation that is run by a board of directors.  That job is to put the financial interests of their shareholders (not their policyholders) at the top of their priority list.  Their duty to you, as a policyholder, is not fiduciary (as it is with their shareholders) but contractual.  Thus, even when you are dealing with a fair and reasonable adjuster,  you need to know what your contract with them says.  That contract is your insurance policy.

     Your insurance company is prepared and well-practiced to fight and defend their rights under that contract.  How prepared are you?  Don’t let the first large claim be the first time you read it.  Caveat emptor.

Shareholders or Policyholders? Who matters most?

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Shareholders or policyholders.  Who matters most?  Take this quiz:

The Board of Directors of my insurance company has a lawful duty to protect:

a.  the financial interests of the policyholders.

b. the financial interest of the stockholders.

c.  both of the above.

d.  none of the above.

The answer is (b).  The Board of Directors of an insurance company’s first (or fiduciary) duty is to the shareholders that elected them. 

This means that the financial interests of the shareholders come before those of the insured policyholder when that corporation is an insurance provider.  Profits come to a business from paying out less than what they take in.  Shareholders demand this in return for their investment.  Insurance companies comply.   Know this as you shop. 

The National Law Review has published a list of the “eleven worst insurance companies” and I encourage you to read it.  Before you take too much comfort in finding that your home insurance provider did not make the list, you should consider that many that made the list are providers of health insurance.  The factors that were used for the home and business insurers that made the list, however, are not unique to them but are commonly shared among smaller companies that would have at least made “dishonorable mention” if the list did not include other types of insurers.

     What this list should teach those of us who buy insurance is the need for us to carefully select an insurance provider based on something other than cute or funny television commercials.  Sweet talking lizards that collect your insurance premium can quickly become vicious and vexatious crocodiles defending the company against your valid claim.  If you can learn this before you become vulnerable as a result of catastrophic loss, the better off you will be.     

The Missouri Department of Insurance publishes a complaint index to help Missouri consumers determine how likely they may find displeasure with an insurance company’s claim handling process.  Considering how few unsatisfied policyholders will actually go through the red tape to file a complaint with the State government , when an insurance company exceeds the normal rate of complaints under such circumstances – it really says something.

Caveat emptor.

Should Insurance Companies Adjust Their Own Claims?

Should Insurance Companies Adjust Their Own Claims?

The State of Hawaii’s legislature is presently reviewing a bill that would dramatically change the way insurance claims are handled.

The proposed law dares to ask the questions “Can the insurance company be trusted to be fair when determining how much they should pay?”

Some people say “No”.

Read more by clicking on the link, below:

http://www.propertyinsurancecoveragelaw.com/2016/04/articles/state-legislation/hawaii-considering-new-law-relating-to-claims-handling/#.VwuHDVRhl1s.linkedin

2015 – Our Most Interesting Claims

As more people in Missouri have become aware of the success and benefits they can derive from hiring their own claims adjuster to present their loss to their insurance company, this past year was our busiest yet.  Of our many claim settlements in 2015, here are a few that stand out from the ordinary:

  1.  After an expensive slate and copper roof was damaged by hail, the insurance company denied the policy holder’s claim for his loss.  They cited a provision in the policy that excluded the damage.  The policyholder was referred to me by his roofing contractor.  My investigation of the facts showed that the date that the exclusion was added to the policy was AFTER the date of the hailstorm – and should not have been applied.  My client, who had originally been told by his insurance carrier that his damage was not covered under his policy, received a payment exceeding $80,000.00 to affect the repairs to his roof.
  2. A fire destroyed a private residence and the policyholder and family were forced to sleep and eat in a camping trailer parked in the driveway while searching for a contractor willing to perform the repair work for the lesser amount that the insurance carrier had estimated the costs to be, which was considerably lower than any contractor was willing to bid.  They hired me to assist them and, after my negotiations with the insurance carrier, they received an additional $60,000.00 for the repair of their home and the full value of their policy (over $200,000.00) for their lost contents.
  3. The policyholder was told that, in spite of the fact that water was entering his home through the storm damage to his roof, the adjuster could not identify any storm damage and that no money would be allowed for roof repair.  The policyholder hired me to assist him and, after further negotiations, the insurance company paid to replace his entire roof.
  4. A frozen water pipe broke in the ceiling of a private home which resulted in a collapse of a major part of the ceiling and water damage to walls, carpeting, and personal contents.  The policyholder decided to hire me immediately after filing his claim and his insurance adjuster called him on the telephone and attempted to talk him out of using a public adjuster — and offered him $16,227.12 to settle his claim.  The policyholder refused to accept the settlement offer, allowed me to act as his public adjuster, and we settled the claim for over $62,000.00

Since starting this business in 2012, I have recovered millions of dollars for Missouri personal and commercial insurance policyholders. 2015 was another great year.

 

Public Adjusters Negotiate on Behalf of Policy Holders … Not Their Contractor

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All of my business comes to me by way of my internet advertising and referrals.  I do not “chase fires and storms” or otherwise solicit policyholders who have suffered a loss to hire me.  A potential client (or the person referring them) must contact me, first.

Referrals come to me regularly from former clients, attorneys, insurance agents, and building contractors who recommend me to policyholders that they know, and that might benefit from my involvement with their insurance claim.

Some Missouri building contractors will attempt to negotiate with an insurance company on behalf of the owner of the property that they are repairing or rebuilding (when not prohibited by law) and will often find that the insurance company refuses to cooperate with them.  Instead of contracting to do work for less than what they need to make, or before using inferior products and labor and cut corners to afford to work for the insurance company’s lowball estimate, they advise the homeowner to hire a public adjuster for assistance.

I have received many referrals from building contractors and have assisted the policyholders that they referred to me with successfully reopening their claim and getting a fair settlement that covers the full cost of the project (as well as my fee) so that the contractor can receive his full pay to do quality work.  This is a win for the policyholder, a win for the contractor, and a win for an insurance company who operates in good faith.

Likewise, policyholders that I help will often ask me for advice or referrals when they have been paid and are ready to begin the work of restoring their home or business.  I will recommend many of the fine and reputable building contractors that I have come to know and admire, knowing that they will be satisfied with the results.

Sometimes I will get calls from contractors who are simply wanting me to aid them to increase their own level of profit, at the expense of the insurance company and the policyholder, by adding unnecessary work to the scope to increase the cost to the job and expect me to negotiate on THEIR behalf and convince the insurance company to pay it.  I don’t do that.

A recent case in point was a Missouri policyholder who was reluctant to hire a public adjuster but was pressured to contact me by his building contractor.  The contractor initially attempted to “represent” the policyholder in negotiating his contract with me and discussing the claim with me, but I refused and communicated directly with the policyholder.  This is the only way I do business.

As I investigated the claim, I found that the insurance company had inspected the hail-damaged roof and siding with the contractor’s estimator and had actually agreed to pay what the estimator had originally estimated the costs to be.  Then, for reasons not clearly explained, the owner of the construction company revised his estimator’s original estimate and added a large amount of money for something outside the normal scope of work, and the insurance company refused to pay for this additional cost.

My job, according to the building contractor who pressured the policyholder to hire me, was to get the homeowner this extra sum for this unnecessary work so that he could pay it to the contractor.  I refused to do this and advised the policyholder that the insurance company had offered a fair settlement that matched the original estimate provided by his contractor, and that I was withdrawing from his claim.

An insurance claim is a matter that is between the policyholder and his insurance company, and the only acceptable resolution to an insurance claim is a complete restoration of the insured property to the condition that it was immediately before the event that caused the loss.  The contractor is hired by the policyholder to perform the work to meet that level of restoration and the insurance company has a duty to pay the costs associated with that level of restoration.  Nothing more … nothing less.

I appreciate the many referrals that I receive from building contractors who are looking to help policyholders achieve fair settlements so that they can be paid in full for their valuable services; however, when the policyholder and I agree to work together on his claim, I represent the policyholder and his interests, only.

Home destroyed by fire.

Home destroyed by fire.

What A Public Adjuster Does for You (Video)

A public adjuster is one of three classifications of insurance adjuster categories.

(1) There is the insurance company claim adjuster who is directly and exclusively employed by the insurance company to protect the insurance company’s financial interests in the handling of an insurance claim.

(2) There is the independent claims adjuster who is contracted to work for various insurance companies to protect the insurance company’s financial interests in the handling of an insurance claim.

(3) There is the public adjuster who is licensed by the state to work exclusively for the policy holder and represents the policy holder’s interests in the negotiations with the insurance company for a settlement to the claim.

Consider Risk Management Strategies When Buying a Home

 

Real estate markets in many parts of the country are heating up, with prices rising at a good clip. In many areas, it is a true seller’s market. So buyers should take heed of the various risks inherent in buying a home and should use sound risk management strategies before taking the plunge on an asset of such size. Here are some risk management and insurance tips to consider for your clients who are shopping for a home.

  • Consider the financial risks by not overextending yourself when buying a home. A good rule of thumb is not to buy a home that costs over 2.5 times your annual salary. Many online calculators can assist you in determining the maximum price for a home you can afford.
  • Consider the property and casualty risks. What are the key loss exposures to the home? For example, is the home in a flood zone? How far is it from the nearest fire department? Is it in an earthquake seismic zone 3 or 4?
  • What is the condition of the home? If it is apparent the home has not been properly cared for by viewing surface level deficiencies, there is a good chance that deeper problems may eventually manifest themselves. Thus, the value of a good home inspector cannot be overemphasized. If it is an older home, when were the various systems upgraded?
  • What types of losses have appeared on the Comprehensive Loss Underwriting Exchange report during the past 5 years? For example, a pattern of water losses may be a warning sign.
  • What type of loss control features does the home have? For example, is there a central station burglar and fire alarm system or a sprinkler system? If the home is in a hurricane-prone area, what windstorm protection devices are in place?

Get more personal lines insurance and risk management tips and ideas from IRMI.

Copyright 2013
International Risk Management Institute, Inc.

 

Carbon Monoxide Poisoning and Detectors

 Carbon monoxide (CO) is a colorless, odorless, poisonous gas that forms from incomplete combustion of fuels, such as natural or liquefied petroleum gas, oil, wood or coal.

Facts and Figures

  • 480 U.S. residents died between 2001 and 2003 from non-fire-related carbon-monoxide poisoning.
  • Most CO exposures occur during the winter months, especially in December (including 56 deaths, and 2,157 non-fatal exposures), and in January (including 69 deaths and 2,511 non-fatal exposures). The peak time of day for CO exposure is between 6 and 10 p.m.
  • Many experts believe that CO poisoning statistics understate the problem. Because the symptoms of CO poisoning mimic a range of common health ailments, it is likely that a large number of mild to mid-level exposures are never identified, diagnosed, or accounted for in any way in carbon monoxide statistics.
  • Out of all reported non-fire carbon-monoxide incidents, 89% or almost nine out of 10 of them take place in a home.

Physiology of Carbon Monoxide Poisoning

When CO is inhaled, it displaces the oxygen that would ordinarily bind with hemoglobin, a process the effectively suffocates the body. CO can poison slowly over a period of several hours, even in low concentrations. Sensitive organs, such as the brain, heart and lungs, suffer the most from a lack of oxygen.

High concentrations of carbon monoxide can kill in less than five minutes. At low concentrations, it will require a longer period of time to affect the body. Exceeding the EPA concentration of 9 parts per million (ppm) for more than eight hours may have adverse health affects. The limit of CO exposure for healthy workers, as prescribed by the U.S. Occupational Health and Safety Administration, is 50 ppm.
Potential Sources of Carbon Monoxide
Any fuel-burning appliances which are malfunctioning or improperly installed can be a source of CO, such as:
  • furnaces;
  • stoves and ovens;
  • water heaters;
  • dryers;
  • room and space heaters;
  • fireplaces and wood stoves;
  • charcoal grills;
  • automobiles;
  • clogged chimneys or flues;
  • space heaters;
  • power tools that run on fuel;
  • gas and charcoal grills;
  • certain types of swimming pool heaters; and
  • boat engines.

PPM

% CO in air

Health Effects in Healthy Adults

Source/Comments

0

0%

no effects; this is the normal level in a properly operating heating appliance

35

.0035%

maximum allowable workplace exposure limit for an eight-hour work shift

The National Institute for Occupational Safety and Health (NIOSH)

50

.005%

maximum allowable workplace exposure limit for an eight-hour work shift               OSHA

100

.01%

slight headache, fatigue, shortness of breath, errors in judgment

125

.0125%

workplace alarm must sound (OSHA)

200

.02%

headache, fatigue, nausea, dizziness

400

.04%

severe headache, fatigue, nausea, dizziness, confusion; can be life-threatening after three hours of exposure

evacuate area immediately

800

.08%

convulsions, loss of consciousness; death within three hours.

evacuate area immediately

12,000

1.2%

nearly instant death
CO Detector Placement

CO detectors can monitor exposure levels, but do not place them:

  • directly above or beside fuel-burning appliances, as appliances may emit a small amount of carbon monoxide upon start-up;
  • within 15 feet of heating and cooking appliances, or in or near very humid areas, such as bathrooms;
  • within 5 feet of kitchen stoves and ovens, or near areas locations where household chemicals and bleach are stored (store such chemicals away from bathrooms and kitchens, whenever possible);
  • in garages, kitchens, furnace rooms, or in any extremely dusty, dirty, humid, or greasy areas;
  • in direct sunlight, or in areas subjected to temperature extremes. These include unconditioned crawlspaces, unfinished attics, un-insulated or poorly insulated ceilings, and porches;
  • in turbulent air near ceiling fans, heat vents, air conditioners, fresh-air returns, or open windows. Blowing air may prevent carbon monoxide from reaching the CO sensors.

Do place CO detectors:

  • within 10 feet of each bedroom door and near all sleeping areas, where it can wake sleepers. The Consumer Product Safety Commission (CPSC) and Underwriters Laboratories (UL) recommend that every home have at least one carbon monoxide detector for each floor of the home, and within hearing range of each sleeping area;
  • on every floor of your home, including the basement (source:  International Association of Fire Chiefs/IAFC);
  • near or over any attached garage. Carbon monoxide detectors are affected by excessive humidity and by close proximity to gas stoves (source:  City of New York);
  • near, but not directly above, combustion appliances, such as furnaces, water heaters, and fireplaces, and in the garage (source:  UL); and
  • on the ceiling in the same room as permanently installed fuel-burning appliances, and centrally located on every habitable level, and in every HVAC zone of the building (source:  National Fire Protection Association 720). This rule applies to commercial buildings.

In North America, some national, state and local municipalities require installation of CO detectors in new and existing homes, as well as commercial businesses, among them:  Illinois, Massachusetts, Minnesota, New Jersey, Vermont and New York City, and the Canadian province of Ontario. Installers are encouraged to check with their local municipality to determine what specific requirements have been enacted in their jurisdiction.

How can I prevent CO poisoning?

  • Purchase and install carbon monoxide detectors with labels showing that they meet the requirements of the new UL standard 2034 or Comprehensive Safety Analysis 6.19 safety standards.
  • Make sure appliances are installed and operated according to the manufacturer’s instructions and local building codes. Have the heating system professionally inspected by an InterNACHI inspector and serviced annually to ensure proper operation. The inspector should also check chimneys and flues for blockages, corrosion, partial and complete disconnections, and loose connections.
  • Never service fuel-burning appliances without the proper knowledge, skill and tools. Always refer to the owner’s manual when performing minor adjustments and when servicing fuel-burning equipment.
  • Never operate a portable generator or any other gasoline engine-powered tool either in or near an enclosed space, such as a garage, house or other building. Even with open doors and windows, these spaces can trap CO and allow it to quickly build to lethal levels.
  • Never use portable fuel-burning camping equipment inside a home, garage, vehicle or tent unless it is specifically designed for use in an enclosed space and provides instructions for safe use in an enclosed area.
  • Never burn charcoal inside a home, garage, vehicle or tent.
  • Never leave a car running in an attached garage, even with the garage door open.
  • Never use gas appliances, such as ranges, ovens or clothes dryers to heat your home.
  • Never operate un-vented fuel-burning appliances in any room where people are sleeping.
  • During home renovations, ensure that appliance vents and chimneys are not blocked by tarps or debris. Make sure appliances are in proper working order when renovations are complete.
  • Do not place generators in the garage or close to the home. People lose power in their homes and get so excited about using their gas-powered generator that they don’t pay attention to where it is placed. The owner’s manual should explain how far the generator should be from the home.
  • Clean the chimney. Open the hatch at the bottom of the chimney to remove the ashes.  Hire a chimney sweep annually.
  • Check vents. Regularly inspect your home’s external vents to ensure they are not obscured by debris, dirt or snow.
In summary, carbon monoxide is a dangerous poison that can be created by various household appliances. CO detectors must be placed strategically throughout the home or business in order to alert occupants of high levels of the gas.
by Nick Gromicko and Rob London

 

Radiant Barriers – Good for Energy Savings/Bad for Fire Safety

They can cool the attic … but at what risk to the structure and the occupants?  Could radiant barriers represent a potential for harm?

Read the McDowell Owens Engineering Inc. white paper as to how “The physical and electrical properties of these materials are such that they introduce new and very serious dangers of ignition and fire.”  

The link that I had used for years to the original McDowell Owens Engineering Inc. report is no longer operating; however, you can find a pdf copy of the report by clicking here.

The summary of the McDowell Owens Engineering study is, as follows:

“1. Standard installation methods for roof sheathing with integrated radiant barrier are such that the end result is an overall environment where all of the radiant barrier material and virtually everything metal on and around the roof are electrically connected.

“2. In most cases, something in that environment is connected to earth ground. If anything in the roof environment becomes electrically energized (by lightning or any other common source) there is a high probability the current will pass through the barrier material at some point on the way to earth ground.

“3. The physical and electrical properties of reflective radiant barrier materials which we tested are such that the material in a structure provides two new and unique hazards relative to fire causation.

(a) When energized by an electrical current the material readily generates temperatures sufficient to ignite MANY materials.

(b) The barrier material itself readily serves as the first ignited material.”

If you are considering radiant barriers as an energy efficiency upgrade … if you reside in a home with radiant barriers that are installed … if you are considering a recommendation by an energy auditor or other entity to install them … read this report, first.

How To Recognize a “Soft” Home Inspection Report

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First, what is a “soft” home inspection report – and how can it do harm?

Many home inspectors that inspect homes for real estate transactions will build their businesses upon the hope of referrals from real estate salesmen to stay in business. Since real estate salesmen make no money until a home actually sells, some inspectors feel compelled to assist them in selling the house they inspect with the hope of gaining future referrals.  To do this, they ensure that their inspection reports do not “alarm” the prospective home buyer or possibly interfere with the sale of the home – with the expectation of gaining favor with the sales agent.

The result is a “soft” report that is of no value to the home buyer, and potentially harmful.  A “soft” report could result in a buyer being deprived of important information that could affect a decision to buy a house that can lead to a serious financial loss.

The following are a few common methods used by some home inspectors to “soften” their home inspection reports:

“Balancing” the Report

     The most common method used to “soften” a home inspection report is to add “positive” things about the home that would be attractive to the buyer.  Some inspectors have told me that they strive to include one positive feature of the home for every material defect that they find in order to “balance” the information.

Most experienced and professional home inspectors, however, already take into account the fact that their client has found features of the home that attract them, or they would not have agreed to purchase it. Professional inspectors know that they are hired to describe the home’s true condition and report material defects that could affect the health or safety of its occupants as well as the sustainability of the structure.

They will perform this service by providing a home inspection report that is complete, accurate, and unbiased.

Sandwiching information about hazardous or defective conditions between flowery comments is not the proper way to write a home inspection report.

“It Wasn’t in the Code Book, Back Then

     Another common technique used to minimize a material defect in the mind of a potential buyer is for the inspector or real estate salesperson to point out a serious material defect in the home but then infer or suggest that it is somehow more acceptable since the correct installation was not required by the code or building standards at the time the home was built.

Any defect that could result in physical harm to the structure or its occupants is serious – no matter when it became part of the house – and should be addressed.  A home inspector’s job is to bring to his clients’ attention every such issue he observes and to recommend that it be corrected.  It is not his job to make excuses for its presence.

Understanding that building codes are simply basic minimum standards of which anything less is illegal … the fact that something harmful may or may not have met code at the time it was built has no relevance to the owner, today.

Estimates

     Another way that an inspector can take the “sting” out of a material defect to “soften” a report is to include an estimate of repair to help the prospective buyer apply what is called “context” to the defect.  This is not common to most home inspection reports, but it happens in some cases.

It is dangerous for the inspector as well as the homebuyer to make purchasing decisions based upon an inspector’s estimates.  Many state laws and all standards of practice discourage inspectors from providing repair or replacement estimates.

Estimates can only be accurately provided by a person or business who is currently doing the work and aware of the present costs of materials and labor associated with the project and will often find undiscovered issues that affect the cost of the project once work has begun.  Many contracting companies employ professional estimators who are trained and current in the practice of providing them.

“I am not an Alarmist.”

     Watch for these code words that home inspectors use to alert interested real estate salesmen that they will write a “soft” home inspection report in exchange for future referrals … something that one court referred to in one recent lawsuit as “consumer fraud”.

Among some home inspectors and the real estate agents they work with is an “understanding” that first-time home buyers are sometimes easy to frighten or “alarm” when they learn of imperfections with a house they intend to buy.  Some home inspectors address this as they solicit referrals from real estate agents by advertising themselves as friendly to first-time home buyers and provide an assurance that they do not “alarm” them in the manner that they describe defects in their reports.

Learn more about the bad results that come from this act of “consumer fraud” … from this lawsuit (click here) … that resulted from a soft home inspection report given to a first-time homebuyer who got burned.

“Free” Warranties and ” Guaranteed Buy Back” Offers

     It makes sense for a real estate salesman to want to take some of the worries out of taking a chance on a new home.  Many will encourage or enhance the sale by providing “home warranty services” that may or may not cover items that stop working when the new homeowner takes over the property.  Some will offer to buy the house if they can’t sell it … or “buy the house back” if you don’t like it, with (of course) a long list of certain disqualifying conditions.

While most home inspectors are careful to inform their clients that they are not providing or implying a guarantee or warranty through their inspection reports, many will want to impress real estate salesmen with the appearance of assisting them in providing an incentive to buy.  Accordingly, they will purchase “90 Day Home Warranties” or provide “Guarantees” that are supposed to cover selected systems within the home against defects for a very low cost ($5 to $15) and will provide them to their clients with paid home inspections.

These low-cost service contracts promising high-end payouts are a common source of complaints with state-level consumer advocacy offices (attorney general, BBB, etc.) and should be carefully scrutinized.  Even when they appear to be provided “free of charge”, reliance upon them when deciding to buy a home can be extremely costly.

In addition to the exclusion-laden free “warranty”  is the recent promotion where some home inspectors offer to “buy back your house” if they miss a defect in their report.  If you really … really … believe that your home inspector can afford to “buy back” every house that he inspects charging his $300-ish inspection fee, then go ahead and take comfort in his offer when deciding to buy a home.  If, however, you are suspicious as to why he will NOT promise to pay to replace the broken water heater he failed to detect for $500 but is willing to “guarantee” to buy back the house for $300,000.00, instead … look carefully at the hundreds of exclusions that assure that no such transaction can ever take place.

When the home inspector, hired to report things that might be wrong with the house, begins providing “free” incentives to help the potential buyer decide to purchase the home (by addressing future recalls of appliances or “free warranties” should things break), this could indicate that someone other than the home buyers’ interests is being considered.

The use of these so-called “warranties” along with other gimmicks (such as ongoing updates on the recall status of appliances, alarm system evaluations, etc.) assist home inspectors who wish to solicit additional referrals from real estate salespeople to help the sales agent advance a presumption that the prospective buyer will decide to buy the house.  They also create an illusion that future breakdowns will be covered at someone else’s expense.  Carefully read these “warranties” and “guarantees” to see that they actually provide the intended coverage.  Many don’t.

While these gimmicks have little to do with reporting the present condition of the home  … they can go a long way in helping a sales agent create a mindset of “ownership” that advances the sale of the home.  This is why some inspectors, according to their conversations in private sections of professional forums, promote their use as “marketing tools” to solicit more real estate agent referrals.  “Agents love them” is a mantra for those who promote them.  One vendor who sells the “We will buy back your house if we miss something” goes as far as to promise participating home inspectors that “every” real estate agent he solicits will provide him with “every” client they serve as a referral.  Some home inspectors believe this and are willing to take a shot.

Homebuyers should ensure that the company that is representing these service contracts is properly registered with their state and should not hesitate to hold the inspector that provided it to them responsible for the provider’s failure to perform under the contract – since it is being provided as a part of the home inspection service that they paid for.  Here is a lawsuit where the home buying victims of a “soft” home inspection report with a 90-day warranty did exactly that … (click here).  A “We will buy your house back” guarantee would also exclude the conditions described by the duped homeowners in this suit.

Caveat emptor.

What Should You Do (and NOT Do)?

 Do your best to seek an experienced, full time and certified inspector, but be aware that even highly experienced and “credentialed” home inspectors can still be found to participate in writing soft reports or using gimmicks in return for future referrals.

While I personally know some excellent home inspectors who have scaled down their businesses for various reasons and continue to do quality inspections on a part-time basis … I know many others who have yet to reach a level of skill and expertise upon which they are able to confidently rely upon or fully commit themselves to be a home inspector on a full-time basis — yet these inspectors somehow expect others to place confidence in that level of skill and expertise to such a degree as to rely upon them to make the largest single purchase that many are likely to ever make in their entire life.

Use the internet to do your research and if you prefer to have someone refer an inspector to you, seek advice from friends or family who have had personal experiences with professional home inspectors.

Be skeptical of referrals for home inspectors from real estate agents or anyone else who has a financial interest or stands to gain from the sale of the home. Often, home inspector referrals come in the form of lists that will contain the names of inspectors known to the list provider to write soft reports or will be simply a list of inspectors who were willing to pay the real estate broker or agent a fee to appear on their referral list. If one chooses to rely upon the recommendation of a real estate salesman for a home inspector and they provide a list of inspectors that they prefer to have a home buyer work with, it is not a good idea to go through the list simply searching for the inspector with the lowest fee.

Instead, homebuyers should seek information about the inspector’s qualifications, length of experience, certifications, and whether or not the inspector is committed to business on a full-time basis since some only perform inspections sporadically “on the side” from their other full-time job. When a home inspector adds a “free” gimmick to an inspection report such as a 90-day “warranty”, he should be asked how he has come to the conclusion that the buyer has decided to go forward with the purchase prior to having read his inspection report.

He should also be asked why he would be involved in matters, regarding future performance or recalls of appliances in a home, that he alleges his report to be exempt from. Using these selection criteria, the best inspectors will stand out quite readily.  Still, one should remember the “code words” when reviewing his advertising and his reports.

(Revised on 6/9/14)

Caveat emptor.

Copyright 2012 James H. Bushart

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