E&O

[TX ladybug]

I recieved a bulk email from another appraiser in my area which got me thinking. Who gives their clients an unedited copy of their E&O in order to get work? This appraiser stated that she would give some clients a blacked out copy with just her name, dates of coverage and name of insurance company and blacked out other fields but had ran into problems with a client ( I understood now past client). What do you do when asked to provide proof of E&O in order to get business? Do you pass up the client or do something like I mentioned this other appraiser did or do you comply and hand your declarations page on a silver plate?

 

[Dan Umstead]

If a lender wants a copy of my E&O, I have no problem with it.

Now, if someone wants a copy of my E&O in an appraisal report, that is another issue. I typically will not include my E&O inside an appraisal, but I have one that requires it. They give me enough work, that the liability seems acceptable. For them, they get a redacted copy with my company name, insurers name, policy dates and that is it.

 

[residentialguy]

What Dan said ... until that one client part. imo

They can have a copy. I tell the client that they are putting not only myself but them in a great risk of lawsuit to have it on the report.

It's not just a bad idea for the appraiser; it's a bad idea for the AMCs and lenders themselves because they risk getting themselves dragged into litigation filed by borrowers who sue appraisers. And, it's pointless because if a lender is going to make a claim against an appraiser when a loan defaults, the E&O policy that will be relevant to that claim a few years later will almost certainly not be the one attached to the appraiser's report when he or she performed the appraisal.

 

[residentialguy]

Here's a good article from LIA insurance http://www.appraiserlawblog.com/2012/07/should-i-attach-my-e-declarations-page.html

The main reason why we advise against attaching E&O information to reports is that it results in more claims being asserted by property owners and borrowers against both appraisers and AMCs. These parties, of course, are neither clients nor intended users. Attaching E&O information to an appraisal report simply invites a few more of these parties to threaten or bring claims. I don't want to overstate the problem because the existence of insurance does not have anything to do with most claims -- most lenders and borrowers will sue regardless. But for a few people, seeing insurance information attached to a report will spark the idea of making a claim. We've seen many claims reported directly to us by borrowers when they are a disappointed with the value and cannot refinance. We've also received claims from homeowners who've alleged things as petty as square footage being off by 2% and then expected a payment as if an appraiser's E&O were a manufacturer's warranty. Many of these claims reported directly to us probably would not have been sparked except for the insurance information that the borrower saw attached to the report. (Claims like these, of course, are defended and rarely result in any recovery to the claimant but all claims cost money to defend.)