Module 1 – Inspection Commonalities
Chapter 3: Risk
There is a high level of risk associated with the completion of any type of mortgage field service. As the number of homes in default rise, so do the volume of mortgagor claims. Mistakes do happen. One of the most common potential claims is reporting a home occupied when in fact it is vacant. Any resulting damage, such as freeze damage or vandalism, that could have been prevented by reporting the occupancy correctly will require repair. The cost of these repairs can be very expensive and the mortgage company will always expect a full recovery for their loss.
Another common claim occurs when the report of a first time vacancy (FTV) is not communicated in a timely manner. In many cases, the Investor requires 24-hour notification, when a property is being reported as FTV in order to avoid the accumulation of additional damage at a property. Insurance claims may arise, if the report of FTV is delayed and damages are proven to have occurred after FTV was known by the inspector.
It is imperative that all mortgage field service professionals be protected by insurance to provide an adequate level of coverage when these claims are lodged. The types of coverage and amounts will vary by the mortgage field service company for which services are being rendered. Most require Errors and Omissions coverage and some require Liability as well. General Liability insurance is designed to cover work that was performed, but maybe flawed or inadequate resulting in damages or injury. Errors and Omissions coverage is designed to protect against a physical damage or financial claim loss due to erroneous or inaccurate reporting.