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Last Post 10/29/2009 9:31 AM by  Ol' Ghost
Do home and building inspectors have an inside track?
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blain0
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10/23/2009 2:06 PM

    It appears from the outside that building inpsectors and you have much in common. I guess the real question is how many of you are practicing certified building inspectors? Or if you left the inspection field to become an adjuster why did you? Could you maintain your inspection business or do you really have to be a full time wholly commited adjuster? And lastly if  an inspector made a change what is a reasonable time frame to become productive as an adjuster given there are events to participate in? Anything down well looks easy but of course it isn't.

     

    Thank you in advance for your responses

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    rickhans
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    10/25/2009 1:40 AM

    I am confused about your questions.  Are you referring to residential home inspectors or building inspectors who work for a city and inspect construction in progress? These are two different licensed and skilled careers.  I have met cat adjusters who are also residential home inspectors and I am licensed as a home inspector for insurability by TDI, but seldom ever get a call.  Most states don't have such a license, but with a license in Texas I can issue a certificate of insurability (if the house passes) that will prevent denial of coverage by any carrier in Texas so long as the property meets their underwriting guidelines. 

    I have never met an adjuster who was also a city building inspector or who quit to be an adjuster, but there probably are some adjusters out there who did move into adjusting hoping to increase their income.

    Is this what you are asking about?

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    moco
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    10/25/2009 3:35 AM
    An adjuster alot of times will deny coverage for items that a home inspector recommends be repaired. For example home inspectors look for broken water pipes, worn eletrical wires, worn out shingles, rot etc. and completes a report stating that they should be addressed. Most insurance policies exclude these type of conditions, which the adjuster adheres to and looks for. There are times when overlapping damages may cause the carrier to eat a little excluded damage, but in most cases not.Alot of policies excluded damages associated with improper construction, design, zoning etc, etc. A City, State or County building inspector enforces these specific things and orders them be addressed. So i do not see much in common between the 3.
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    Ray Hall
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    10/25/2009 8:57 PM
    I think this guy is the one who the buyer calls to inspect the house for "thinks" out of order for a real estate buyers agent. I don,t think all the little flaws in a 30 yrar old house would give you any special leg up, but you would alrady know the componets that made a dwelling.This is not a real science either, seems most fall into the deal breaker or the deal maker on an old old house. My wife has been a realtor for 40 years and have read hundreds of these reports. I am not impressed.
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    Leland
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    10/25/2009 9:37 PM
    My wife is also a real estate agent, and I have also read many of these home inspection reports. When I worked for a contractor, we had a relationship with a big real estate firm that would often give us assignments to use the home inspector's list of problems as a punch list for repairs.

    As stated above, a home inspectors list of problems is usually wear and tear items, sometimes construction defects, or improper installation.

    A home inspector might point out that a water heater does not have the proper metal strapping to meet california earthquake codes, a stove has a burned out light bulb, a faucet drips, a window screen is missing etc.

    A good home inspector might check things like the carbon monoxide emissions from an old heater, or check the polarity of wall outlets. A thorough home inspection might reveal a huge laundry list of relatively minor items that the buyer can use as a negotiating tool. Sometimes an inspection reveals a major defect that will cause a buyer to walk away. If the home inspector is hired by the seller it could result in a conflict of interest.

    When I bought my house I had a home inspector and I made sure to follow him around and see what he looked at. He checked every appliance and light bulb which I thought was a waste of time because I wasn't worried about those things. If I had to do it again I might just get a contractor to look at major things that could break the bank.

    Would a home inspector make a good adjuster? First of all, home inspecting doesn't teach anything about policy interpretation. Secondly, home inspectors do not really deal with scope of repairs and especially not the cost. So the only similarity in my view is that they have to be familiar with the details of a house, look at things carefully, and write reports. That's not starting from scratch, but it's not much. Most contractors (that write estimates) would be better prepared. I'm not saying that home inspectors can't be adjusters, I'm just saying their training doesn't give them a huge leg up, maybe a small one.

    As far as adjusters becoming home inspectors I would say maybe, but again, it's two different businesses.

    Here's a list of the most common problems found on a home inspection. Some are things that adjusters deal with and some, like code violations, are not. Bear in mind that if an adjuster becomes a home inspector, and fails to notice a major code violation, the buyer of the house may hold the inspector liable for a lot of money.

    Problems with roofing- improper flashing, deterioration etc.

    bootleg electrical work

    failing windows/window seals

    termites/dryrot etc.

    water stains on ceilings

    failing or dirty chimneys

    poor ground water drainage, leaky basements etc

    additions done without building permits

    water heater problems

    plumbing leaks

    If a house was just bought a short while ago the adjuster can ask for the home inspection report (with photos). This would be very useful on a total loss fire to see what the house looked like. You can also get the appraisal report, with photos.




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    joe
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    10/26/2009 12:46 PM
    no
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    RJortberg
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    10/26/2009 1:36 PM

    Leland- good description. I'd add that a good home inspector would check the foundation for cracking or settling issues. Inspectors could also have a leg up at understanding pre-existing conditions that could be confused with a covered loss. What I found surprising is that many inspectors' insurance policies do not allow them to climb on roofs. Instead, many do inspections of the roof from inside the attic.

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    Leland
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    10/26/2009 1:46 PM
    many home inspectors do roof inspections with binoculars. One reason is they don't want to be liable for damaging the roof when they walk on it. Adjusters don't have this issue because the policy requires the insured to allow inspection and the adjuster can include any extra damage in the settlement. Another thing home inspectors don't usually do is measure and draw roofs.
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    rickhans
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    10/27/2009 3:19 AM

    For those who don't know, there are two types of home inspectors in Texas. The real estate inspectors are licensed by the real estate commission. They are prohibited from inspecting for termites and other wood destroying insects as the law requres that to be done by a licensed exterminator.  They are trained to inspect electrical, mechanical, plumbing, and framing to the current codes and to list any item that does not comply with current code even if it met the code that was in effect when the house was built.  Most do not make any notations in their reports that those items are in compliance with the original codes, that they are grandfathered and no repairs are needed, leaving the impression on the buyer that repairs need to be made.  I have lost several sales of houses in the historic district due to that exact reason.  I lost two sales in a row on the same house that was inspected by the same inspector. For the second inspection he just copied his previous report and charged for a new inspection even though I had disputed his original claims of problems (that did not exist) in writing to the first buyer and their realtor.

     

    The other type of inspector is licensed by the Texas Dept. of Insurance as a "VIP" inspector. To save time you can search the TDI website and learn more about it.  Because I am an adjuster, I met all of the training and other requirements and received my license with no additional training or testing required. The VIP license specifically REQUIRES that the inspection include wood destroying insects and termites. A promulgated form is used to write the detail report, photos are included, but there is no requirement that we have to report non code compliant items so long as they are safe and met the code when the house was built. Some inspectors might have a problem with this if they have not worked in the construction industry. It is recommended that the inspector request a clue report to know about any prior claims on the house to ensure that they were repaired properly.  When the inspection is completed, the inspector determines if the house meets the criteria needed to certify insurability. If so, he issues a certificate that goes to the carrier who has to issue the policy unless that house itself does not meet their underwriting guidelines.  When the report is completed, the buyer should have as clear, if not clearer understanding of the condition of the house when compared to the real estate inspectors report.

    There are two drawbacks to the insurance inspecting job. One is that TDI does not allow enough to be charged for the inspection.  They set the rate at a little over $100 plus milage regardless of the size of the house and whether it has a pier and beam foundation that requires me to inspect from under the house. The other is that the real estate companies, one in particular, want "their inspectors" to do the job and say that it is illegal for an insurance inspector to issue such a report to a prospective buyer.  I had a serious argument with the CEO of one firm who also happened to sit on the TREC board and adamently refused to allow their realtors to refer any buyers to me for inspections.  I sent a copy of the law, my license, etc. and explained but it did not good.  I called TDI and they had heard this before and said they settled the disagreement with TREC but CEO would not budge.  I gave up on trying to do inspections because I needed a large volume to make any money doing it and to pay for e&o insurance. I maintain the license because it might come in handy sometime but I am not currently promoting that business. 

    In reference to one of the other comments earlier, I will add that I was offering more services than just the inspection. I had a price structure to scope and estimate a repair or renovation job at the buyers option if they were buying a fixer upper, or if major repairs were needed, and would act as a repair consultant to the buyer once they selected a contractor to do the work.  As the inspector I could not do the inspection and bid the job as a contractor due to conflict of interest.

     

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    Ol' Ghost
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    10/27/2009 9:34 AM

    Rick, you're actually pretty close on the VIP, and please allow me to further illucidate.

    The purpose of the Voluntary Inspection Program, VIP, is to certify the insurability of a house. It is the result of some consumer legislation that was passed in Texas in the mid 1980's during the Great Contraction when the insurance industry began to rapidily shrink in terms of the number of insurance companies available to sell Fire and Homeowners policies. It laid pretty much dormant until the Great Mold & Slab Wars. Due to political heat from the constituents the politicians began to panic, then discovered the VIP was already in place to save their delicate nether regions.

    I was drafted into the program to be a Certified Residential Property Inspector number 55 in the program in August 2002.

    The miracle of VIP is we are dealing with underwriting issues that affect only the condition of the Risk. Moral issues, Redlining Issues, (Yes, I know it's illegal but they do it anyway.), and certain types of prior losses and frequency are NOT factors VIP affects. What VIP does do is, once the house passes the inspection and is in average to better condition a certificate of insurability is issued to the customer along with the worksheets. Here comes the fun part.

    "A certificate of insurability creates the presumption your home is insurable. If you have a certificate, an insurance company can't refuse to sell or renew a policy because of your home's condition unless the insurer reinspects it and describes the deficiencies in writing."

    WHOA!!! The sun has shined down on us. So, here we go out and certify the insurability of a house. We are not privy to it's prior loss history and we don't care. One water loss, two water losses and a hail loss. Add in a lightning loss and some wind a year later. All this shows up on CLUE, Comprehensive Loss Underwriting Exchange, the agents/underwriters view into the past courtesy of the paid subscription on the Internet. All this loss activity butts up against any carriers underwriting guidelines. The underwriter sitting in her cubicle grabs the rabbits foot, crosses herself, and slams the reject button, UNACCEPTABLE!!!

    But, wait kind people. What about this official Dept of Insurance Certificate of Insurability bought and paid for by the customer? (They don't become Insureds until they are accepted by the underwriter.) 'Since the Great State of Texas says this house is insurable and the law says we have to accept it, unless we can find and describe a deficiency, we're on it.' So, what we have is a CLUE fighter. One loss, two losses, four losses, it doesn't matter as long as the losses affected only the condition of the house and the Insured was not a contributor to the losses. With VIP, acceptability of insurability of the Risk is shifted from the control of the carrier to the consumer. Can we get big Amen from the congregation?

    As Rick says, VIP is regulated by the TDI and the home inspection boys are regulated by TREC. The home inspection boys can and do charge big bucks while the VIP is limited to about $104.21. The Home Boys are there for hours on end looking for defects to justify their fee while a VIP normally can be done in well under an hour. The Home Boys get their referrals from Realtors. A VIP inspector gets referrals from insurance agents who see the prior losses on CLUE and suggest the customer call a C.R.P.I. as the VIP certificate can get them around the carriers underwriting guidelines.

    Again as Rick says, the need for VIP has dropped off precipitiously in the past couple of years and my last one was over a month ago.

    Ol' Ghost
     

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    rickhans
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    10/27/2009 10:09 PM

    Thanks for the additional detail.  I had not thought the water and mold problems.  Are you saying that on occassion they will deny coverage based on prior mold or water claims, or do they usually issue coverage in spite of those prior claims because the VIP inspector issued a certificate?  On another note, did you have a problem obtaining E&O to do the inspections.  My policy that covers adjusting and private investigating specifically excludes coverage for residential inspections that are not related to a specific claim being adjusted.

     

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    Ol' Ghost
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    10/28/2009 12:05 AM
    Even with the Certificate of Insurability, a potential Risk can be denied coverage if the prior loss(es) are for causes of loss the carrier deems as being contributed to by the Insured. For example; a fire loss caused by a religious candle the faithful Insured set out too close to a flammable object would be considered by an underwriter as a cause under the guidelines for rejection or non-renewal. Or, lack of maintenance to the A/C system that causes the drain pan to overflow. Again, an instance where the moral character of the owner becomes a factor for underwriting action. But, let's say this deficient person repairs the house properly then dies and the property is sold. The new buyer comes along only to discover from his/her agent the true prior loss history because the sellers estate somehow forgot or didn't know of the claims to mention them on the sellers disclosure statement about the various damages, now fixed.

    Tho the buyer is not to blame, he/she must still provide a Certificate of Insurability to the carrier of their choice to get the coverage so that in turn they can get the mortgage. On your printout from the D.O.I. explaining the program in the middle of the page under the 800 number, it states the above quoted paragraph and under the insurance code, the carrier must accept this property and customer. Should they resist, the whole weight of the Great State of Texas will come down on their heads with all kinds of penalties.

    All of this has been explained in great detail to all the carriers writing residential property insurenace in Texas. The rub is a lot of them do not like having the ability to reject a Risk taken away from them and the power being given to the potential Insured. What do they do? They stick their heads in the sand and pretend it doesn't exist. Farmers Insurance is like this. Even tho on the agents application screen is a tiny question saying, 'VIP, yes or no', the agents are not instructed what this is. If they call their District Manager, he/she doesn't know. Call the underwriter and they say they will get back to them but never do. What Farmers uses instead is their Form 51-1039, the Property Inspection Survey. It is nearly identical to the VIP worksheet yet lacks the power of the State of Texas Certificate of Insurability. In other words, Farmers chooses to ignore the VIP and retain the power to accept or reject a Risk according to their own guidelines. Should a VIP cross their desks they are stuck, but since so few people, agents, Realtors, or all the dogs & cats in the state know what VIP is, it doesn't matter.

    On the other hand, Allstate actively relies on VIP when a potential Risk shows up on CLUE with a prior water loss and has done so since January 2003. However, with the change in Texas Homeowners policies, loss frequency has dropped a good 80% resulting in increasingly fewer losses showing up on CLUE, thus the diminishing need for the services of a C.R.P.I. like you and me.

    As for E&O, being the wild nature boy I is, I choose to run naked. If some one wishes to sic the Texas Hammer on me, then Mr Adler and his pals can suck on this turnip all they want but at the end of the day no blood will be on their tongue.

    Ol' Ghost
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    Ray Hall
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    10/28/2009 1:26 PM

    This is general info of interest to adjusters who are residents of the states they work catastrophe claims in like Texas. We were upset when named in lawsuits and requested the vendors or the carriers to defend us by thier lawyers. The carrier did not defend, however my vendor did.

    I was thinking joint and several liability apportionment was the target..... my experts say the target was to keep the suits in Galveston and Jefferson County District Courts for all the same old reasons as the Texas resident status would not allow it to be removed to Federal court.. Glad to get this news and I will be out of the woods in 4 years from the date of the filing ( 2 for a tort+2 for a contract). I have said enough, please do not ask any questions.

    Please do not chime up with this E & O protection BS. I was not negligent, I did not commit any error or omission/act. I just worked a claim like I was instructed to do. The carriers must proptect us in these type suits. Why don,t we have a hold harmless and indemnity agreement with the CARRIERS, before we WORK their cat. claims. We all must be W-2 employees to have any real protection. How many vendors have W-2 employees. Is it just one or about 1/2 dozen. I know Pilot has W-2 employees and thats the only one I know.If you working adjusters know of any more please list them here.

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    Leland
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    10/28/2009 4:24 PM
    I never would have imagined that Texas of all places would have more confusing bureaucracy on anything than California. One difference here is that real estate sales go through escrow- if the buyer can't get insurance, the loan won't fund and the sale won't go through. At that point the selling agent and seller would know about any insurability issues if they didn't already, and they would have to disclose to the next buyer. By California law sellers must disclose known defects.And adjusters (or attorneys) can get copies of disclosure documents if there was a question later relating to an insurance claim on a possible pre-existing condition.

    One thing that isn't the insured's fault but sometimes affects insurability is slab leaks. Sometimes I go to houses that have had 3 or 4 previous slab leaks.

    I don't think insurance companies do very many underwriting inspections, maybe just a drive by photo. I never had anybody come inside my house and look around.

    Why are they doing these inspections in Texas- I don't get that part. Too many homes that are high risk?
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    claims_ray
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    10/28/2009 4:44 PM
    Also in California a seller has to disclose if there has ever been a death on the property. This is obviously for those susceptible to the paranormal.
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    Tim_Johnson
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    10/28/2009 6:23 PM
    Our E & O / GL policy covers 1099'ers
    Tim Johnson
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    rickhans
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    10/28/2009 6:52 PM

    In reference to the comment about escrow protecting the buyer, it actutally has no effect on insurance coverage. It is not uncommon for a buyer to close on the house then a few weeks later the carrier does an inspection and denies coverage and cancels the policy retroactive to the closing date. If a VIP inspection was done and a certificate issued to the buyer and passed on to the ins. carrier, the carrier is not supposed to cancel the policy after issuing it. 

    The property disclosure does not really have any effect on the insurance issue.  Other than disclosing major repairs to the house that may or may not be related to an insurance claim, the only question on the Texas disclosure that mentions or relates to insurance is: Section 8: Have you ever received proceeds for a claim for damage to the property and not used the proceeds to make the repair for which the claim was paid?  There is one other disclosure item that asks if the seller has within the last 4 years received an inspection report from anyone licensed as inspectors or otherwise permitted by law to perform inspections.  If a claim had been made and an adjuster inspected the property this could possibly require answering yes, but I think it really means a full inspection of the house, not just of the portion involved with a claim. 

    In other words, for a buyer to be fully informed in Texas of the property condition and know it can be insured is to have a VIP inspection.

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    jdacree
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    10/29/2009 8:28 AM
    Blaino in reference to your question, the basic knowledge required to do a home inspection provides the bare mininum for adjusting. As a remodel/repair I have looked at clients home inspection reports and acting on thier behalf, contested the reports. In most cases the areas contested were of the COYA (Cover your A**) items that the home inspector puts in a report. In every case I forced the report to be rewritten to exclude those items.

    In my short experience I have found two diveriging paralles. A inspector turning adjuster has to temper his review of a property. As a inspector he is trying to pick the pepper out of the flysh**. He has to learn what is covered damage and learn to ignore the flysh**. Sme people can do this some cannot. As a adjuster turning to inspector this person has to learn to look for the flysh**, again some people can do this come cannot.

    Are the two compatible, YES IF the person is flexible in his thinking. Does the training from one transfer to the other, YES IF the person can remember what position he is employed in.
    Jim Acree Stupidity is the art of not trying to learn Ignorance is the lack of opportunity to learn I am ignorant
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    Ol' Ghost
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    10/29/2009 9:31 AM

    Leland, back in the good old days, underwriting departments would have 10% of their property book of business inspected each year so that over a decade, the entire book would be reviewed, as well as every new piece of business added on policy inception. These inspections were farmed out to independent inspection companies. They would then subcontract to their 1099 inspectors at a 50% fee split. The fee has always been extremely cheap on the theory that volume would make it all palatable. This was when gas was cheap, car insurance was cheap or not really mandated, and the general cost of living was not as expensive as it is in this brave new world. I'm talking about the pre-1974 America. Back then a typical front & back photo of the Risk with a diagram and some basic condition information earned the inspector $3.75 less the cost of the two Polaroid photos and the gas to get there. These days, the same report is worth about $12.50, but the Polaroids have been replaced by digital. This is what is popularly known as the 30mph drive-by. As you can see, underwriting inspections are the poor, trailer trash cousins of the claims department. By contrast, we who fight the claims battles for the company are grossly overpaid in comparasion. And, these inspections are done without notifying the Insured. When I was doing them, no one was ever home, it was just me and your dog. One thing, when you do this kind of work, you learn to be very, very quiet in opening the gate to the back yard so the sleeping dog stays asleep the entire time you go to the back of the yard to take the rear Risk photo and then exit the premises and silently close the gate. And you think cats are quiet?

    But, that was the good old days. These days the afore mentioned MBA honchos have already chopped away all the corporate fat and muscle, so they are now using cutting torches to remove the bone and sinew. The budget allowances for underwriting inspections now only allow for a fraction of the outside inspection surveys. One carrier, Farmers, wants to have the Insured called to try and determine if a field survey is really needed by inquiring the age of the roof, or the fence, or the paint, or if an uncaged trampoline is in the front yard and the Risk is next door to an elementery school. As such, the wonderful world of underwriting inspections is dwindling into the setting sun.

    Demand for the VIP has dropped due to the hangover effects of the Great Mold & Slab Wars wearing off, plus the changes in the policy wording, and the huge decrease in claim volume industry wide.

    Ol' Ghost

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