Tail insurance coverage - suggestions?

[Michigander]

Hi all,

I left the fee world just over 3 years ago to become a corporate appraiser. At the time I left the business, the only insurance options available were "tail coverage" on my policy, that would take me out 3 years from the expiration date. That date is fast approaching and when I contacted the insurance company, was informed that there is nothing else they can do and that after it expires, any claims would be my responsibility. As I have never had a claim (touch wood) in 18+ years of appraising, and they have had my insurance almost the entire time, I am a little appauled at their lack of flexibility on extending coverage. They said this is the norm for the industry, since most claims happen within a 2-year period of the incident.

Has anyone here retired from the fee world over to staff and run into this situation? Or retired period, and still able to maintain coverage?

I am in an area where prices have declined pretty much back to 2000 and 2001 levels, so we are seeing foreclosures right and left and everyone looking for some kind of scape goat. Although I feel confident in my work product, I am not naive enough to think that I (and others) are free from lawsuits, and this pending lack of coverage concerns me greatly.

Advice? Anyone ever run into this?

 

[Vegan702]

So let me understand this, once you stop appraising you must purchase additional insurance to cover the work that you did while you were insured? So even though I am liable for at least 5 years, and paid for insurance while working, then purchased this "tail coverage" for 3 years I still have to worry for another 2 years? Interesting as I would have thought that whatever coverage I had at the time of the appraisal would be responsible forever for that appraisal I did.

 

[Rice Brewer]

S...I would have thought that whatever coverage I had at the time of the appraisal would be responsible forever for that appraisal I did.

In a "claims made" policy, the policy must be in effect at the time of the claim for coverage to be in force.

 

[Rice Brewer]

Hi all,

I left the fee world just over 3 years ago to become a corporate appraiser. At the time I left the business, the only insurance options available were "tail coverage" on my policy, that would take me out 3 years from the expiration date.

Serena, why did you purchase tail coverage rather than just keep your EO Coverage for another five years?

 

[Michigander]

Vegan, once you leave the fee world (whether you retire or go on to another aspect of appraising in a corporate setting) you can no longer maintain the coverage you had as an independent. So far the only thing I have heard is that they will cover as far as three years, then you are out of luck.

I work in a retrospective world, mostly looking at appraisals from 2005 and 2006, but some back as far as 2002, so the time frame is a concern, in particular in a market that has suffered the steep declines we have had in my area.

Thanks Rice.

Any retired folks out there?

 

[Michigander]

wasn't an option

Serena, why did you purchase tail coverage rather than just keep your EO Coverage for another five years?

Hi Rice, since I was no longer able to accept orders on my own, the insurance company said they could not insure me any longer and my only option was a 2 or 3 year tail end coverage policy (for which I paid through the nose). Now it is almost done and they won't extend it, even though I have had zero problems in the 18 years or so they have been taking my money....

 

[Vegan702]

Note to self, remember do not cancel my E&O for 5 years after I stop officially appraising. I never would of known about this.

 

[Michigander]

Every year that you renew, the E&O insurance coverer asks you how many appraisals you performed the year prior, and for whom. Are you going to lie? I don't know of any options where you renew for a long-term period other than when you leave the business. Perhaps it was just my insurance company, but I would venture a guess that this is industry wide.

 

[PL1957]

Note to self, remember do not cancel my E&O for 5 years after I stop officially appraising. I never would of known about this.

5 years is how long you need to keep your files. They can sue you at anytime before or after that 5 year period. There's no time limit for greedy attorneys.

 

[Lloyd Bonafide]

Serena - by purchasing three years of tail coverage, you were smarter than the average appraiser who had left the business, or who had left the fee world. Is there no coverage for staff appraisers available?

If not, and if I were you, I wouldn't worry about it anymore.