[Liability Management] Risk Reduction

Documentation and Disclosure — those are the two “Big Ds” that are the keys to reducing, or even avoiding, inspection liability.
“When you’re inspecting your pest control customers’ structures, it’s so important to document and disclose the scope of your proposed activities — what you’re going to do and what you’re not going to do for them,” emphasized Rex Jennings, speaking at NPMA PestWorld in Nashville, Tenn. “If a claim arises later on, this is the basis for which way the claim will go.”
Jennings, a certified insurance counselor with Sedgwick and Lockton, Dallas, Texas; Michael Weisburger, president of Weisburger Insurance Brokerage, White Plains, N.Y.; and Allen Fugler, vice president of marketing for LIPCA, Inc., Baton Rouge, La., are three well-known insurance brokers serving the structural pest control industry. They offered expert advice on reducing inspection liability to PestWorld 2005 attendees.
Be sure you are adequately documenting your inspections, they each emphasized.
“Assume that somebody has called in about termite damage after you’ve done an inspection. Can you document that the inspection actually occurred and was performed correctly? Drive-by inspections don’t qualify. You can get into a bad situation if you don’t have the files to back you up,” Jennings cautioned.
“Be sure that you document the fact that there were inaccessible areas. No PMP would be expected to be able to render an opinion about such an area. And consider using graphs and photos. There’s no more compelling evidence than a photo of conditions that you find when inspecting.”
Jennings suggested it’s a good idea to require homeowners to sign your inspection report. “Basically, if homeowners sign, there’s the presumption that they’ve read the report. If you’ve done a good job of documenting and you’ve got a signature, you’re probably going to be in good shape if a claim does develop later on.”
Weisburger warned his audience against succumbing to the “This Could Never Happen to Me” syndrome. “Many of us in our business and personal lives see bad things happening to others and think, ‘I do everything right, so nothing’s going to happen to me.’ Two months ago I wouldn’t have thought that I would choke on food and almost die, but that actually happened to me and I would have died if my dad hadn’t performed the Heimlich maneuver on me. So I can personally tell you that bad things can happen to you. Don’t think that you are immune to potential business liabilities. None of us are.”

GET TO KNOW YOUR REGULATORS. Working closely with industry regulators also can protect you from a liability problem, according to Fugler. “Believe it or not, regulators are your best friends in the pest control industry,” he said. “I strongly recommend that you get to know your local regulators and get to know the regulations as they pertain to your reports. And use those reports.”
WDO or WDIR reports can verify compliance to regulations, Fugler explained. “Termite work (inspections) typically produces the least amount of revenue and the most amount of liability. But for the $50 cost of a report, you’re protecting yourself against the liability of a $500,000 house.
“People ask how I price these reports and I tell them to add $100 to their deductible and then charge their customers extra for that amount, because they will eventually pay a deductible on one of their reports.”
According to Fugler, these reports are a good defense against accusations of negligence. “Negligence is probably the reason for suing a pest management professional. But the report of your regulatory body can verify that you’ve done nothing wrong.”
 
ROLE OF TECHNOLOGY. Weisburger, Fugler and Jennings also advised pest management professionals to use technology as part of the inspection process.
“When it comes to new technologies, science fiction is now science fact,” said Fugler.
“Certain tools are fairly cost effective,” he added.  “Digital cameras, moisture meters, probing tools and boroscopes can help give you a good idea of what lies behind walls and barriers that are otherwise inaccessible. Some of these tools are rather crude, but inexpensive,” he said.
“But some interesting things are on the horizon, such as the use of infrared cameras looking for anomalies. Using them, you can differentiate cool areas from hot areas, and that can possibly indicate the presence of subterranean termites behind walls. But it’s not foolproof. They also can discover roof leaks and other structural defects, such as poorly constructed or poorly insulated air conditioning ducts.”
According to Fugler, ultrasound detection devices can detect movement, and acoustic listeners can reveal the sound signature of termites chewing on wood.
“There are also available such things as carbon dioxide detectors and resistographs, which measure the density of wood,” he said. “We’ve used them to test trees in the New Orleans area. The resistograph can indicate the presence of subterranean termites that have created cavities inside solid wood material.”
Fugler also mentioned man’s best friend — termite dogs. “They’ve been around for a while and are effective. I’ve seen them work in the field. They’re great marketing tools as well. These highly trained dogs can recognize the olfactory signals of subterranean termites that gas off naphthalene and carbon dioxide.”
However, be careful when you apply these technologies, cautioned the three insurance experts. “With increased technology come increased expectations,” Weisburger said. “You can incur some liability by using technology, but you can reduce liability by doing a better inspection with those tools.”
“Be careful of what you put into your documentation,” added Fugler, citing fences as an example. “Choose your words carefully because you can have termites in a fence 50 feet or 100 feet away from a house.” He also suggested exercising caution when making recommendations for treating obstructed or inaccessible areas.
“For every inspection that you do,” said Jennings, “state that there’s a treatment file available upon request. Make a rubber stamp and put that wording on every single WDO inspection you do for your customers. If you’ve developed a history for a property, make it available to potential buyers of the property, but make sure you have written permission from the seller. You don’t want to be played for a ‘patsy’ in this inspection.”

Jordan Fox is a freelance writer based in Milwaukee, Wis.