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E&O for fee-split appraisers

Discussion in 'Running an Appraisal Business' started by Salty, May 1, 2012.

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  1. Salty

    Salty Sophomore Member

    6
    Mar 12, 2010
    Professional Status:
    Certified Residential Appraiser
    State:
    Pennsylvania
    How do those of you who send overflow work out to other appraisers handle E&O?

    Do you have a group policy that covers the appraisers who you provide work to even if they have their own E&O?

    If I provide overflow work to an appraiser on a fee-split basis and I submit the work to the client under my company name it is my understanding that I should have the appraiser under my E&O policy. I suppose that means that appraiser is double covered if they already have their own E&O right?

    I see ads for fee-split appraisers who “must have their own E&O”. Am I to assume then that the work those fee-splitters are turning in are not under the company name of the firm providing them the work?
     
  2. William Rightsell

    William Rightsell Member

    0
    Oct 22, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    North Carolina
    Salty....

    My policy has a special rider which covers work from any independent contractor that is performed under my company name. I had to pay an extra hundred or so it seems like to get the coverage. Well worth the peace of mind.

    Covered or not, if the "overflow" appraiser gets in trouble when the law suits start flying YOU will be served too....because they ordered the report from your company. Never mind that you may not have even signed it.

    todd
     
  3. Privateer

    Privateer Junior Member

    0
    Apr 8, 2008
    Professional Status:
    Banking/Mortgage Industry
    State:
    California
    Salty,

    Todd has it right. If you are using subcontractors or have ever had subcontractors or appraisers who worked for you, for whom you supervised appraisals or for whom you billed fees, you need to have a policy that covers not only your own work but also covers you for claims resulting from their work. Most appraisers do not have that coverage because they have very narrow coverage that only covers claims based on appraisal work they solely perform. The broader form of coverage is built into some policies or added by endorsement to others. It does not mean you have to pay for "double coverage" if they have separate coverage but it does mean you need to address that you work with subcontractors, trainees or other appraisers with your insurance provider and make sure you have the right coverage to protect you.

    This is a very common liability trap for appraisers.

    -- Peter Christensen
     
    Last edited: May 1, 2012
  4. Mike Kennedy

    Mike Kennedy Elite Member

    254
    Sep 28, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    New York
    ...........Ditto.
     
  5. JTip

    JTip Senior Member

    183
    Oct 12, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    Pennsylvania
    I have never seen a 'broad' subcontractor endorsement for E&O, although I'm sure it exists. That's a pretty big exposure for the company, especially if you farm out substantial work from people across your region. You may want to review this with your carrier, I would not assume anything.

    Most policies require the subcontractors (individual appraisers) to be added as an 'additional insured' by name.
     
  6. ctapraser

    ctapraser Senior Member

    0
    Feb 3, 2012
    Professional Status:
    Certified Residential Appraiser
    State:
    Connecticut
    Yup, mine also
     
  7. JeffreyAmato

    JeffreyAmato New Member

    0
    Aug 11, 2008
    Professional Status:
    Certified Residential Appraiser
    State:
    North Carolina
    Our company has quite a few appraisers in different states. I'm pretty sure we are all on the same E&O policy. About 20-30 of us. We do not have our own individual policies.
     
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