Hello Robert,  If you have a car accident the other driver "may have" insurance , our clients do have insurance. It would be logical that fly by nights would be the ones who do not have the insurance , but what happens is there are companies(who think they can learn as they go) that come in and tell clients they have e&o to make them seem professional and offer low prices to gobble up the work. Most of the times claims don't come in tell further on down the road and when they do these companies go out of business.

             There was this guy who opened up a company in my county, he claimed to have e&o and took on alot of work. He had no employee's except for the occassional "off the books employee". This guy told me one day about noon how many searches he had completed that morning and I know even the most seasoned company with a large staff would have taken 2 days to complete.He did alot of guess work and finger crossing. He would also ask us questions such as " I found a declaration in 1999, does this mean all the mtgs prior to 1999 are satisfied". That is just one of many questions he had to show us he did not know what he was doing. He went out of business about a year later which was a wonder to most how he lasted that long.

           I have been asked by clients in the past if I had e&o insurance but when I told them I would have to increase my prices they said forget about it. I have many problems with obtaining e&o insurance. I work in a huge county (suffolk) and when I talk to the old timers ( In the business over 40 yrs) they don't know of any examiner who was sued. The mind set is if they were going to have the insurance just like the title companies , then they should be paid like the title company. There are a few companies however who agreed to pay for some small claims out of their pocket in order to keep a big client happy , but I have only heard of a few times this happened. Most seem to let there good name get them work.

           The 2nd problem is that it is my understanding that if you have e&o and it expires ( or you forget to pay the bill) or if you cancel it for any reason such as going out of business or you did have a claim and you could not afford the premium increase then all the work you had done while having the e&o you are no longer covered for that past work. So if there is a lapse in coverage you are screwed. Please correct me if that is "false", If it is true I would think at that point if you get sued for a claim and tried to tell the court you limit your liability to the amount of the search the court will say "if that is so why did you have the e&o when the work was done and therefore say you were wrong to let your insurance to expire. So if you go out of business you would have to keep paying the insurance for years to come. Once again if my thought behind how the E&O works is incorrect please feel free to set me straight.

            One last thought is an article you posted a while back about an examiner who charged approx $25.00 to do a last owner search missed a judgement or mtg had to pay a huge claim since his e&o did not cover the cost. When reading that article I wondered if he did not have any E&O insurance and claimed "liabilty limited to the amount of search" if he would have gotten away with paying that huge claim ( instead he had the e&o and tried to say he was limited). If you heard of any more stories of examiners being sued I would like to hear them.

                                 Thanks Mike