E&O Insurance

[Vicki Maas]

I have been an appraiser for a few years now. My company is a corporation. My renewal period is up for my errors & omissions insurance and I am wondering if I should renew the insurance or not. My business has really slowed down and I don't plan on going out and getting extra business. In the past I was doing a lot of volume and I thought I needed the insurance. If something where to happen and I get sued wouldn't I be able to just close my company because it is a corporation regardless if I had E&O or not and still not been affected? Any advice? Thank you for your response!

 

[Lee Lansford]

The corporate status is not going to prevent someone from suing you as a licensed appraiser; if it did, the insurance providers would soon be out of business.

Many doctors are part of a corporation; they are not shielded from malpractice suits.

I wouldn't be in any hurry to not renew your insurance.

 

[Vicki Maas]

Thank you Lee for your reply. My thought about the corporation status is that if I am incorporated than they could only sue my business and not me personally, right?

 

[ChrisAaron]

Your questions are probably best directed to an attorney.

But I will tell you that an appraiser with E&O is much more likely to be sued than an appraiser without it. Few attorneys will waste their time suing a private individual, they'd much rather go after your E&O and settle with them.

Of course, you will never get any new business without E&O.

I have E&O and rarely think much about it.

 

[Mountain Man]

Thank you Lee for your reply. My thought about the corporation status is that if I am incorporated than they could only sue my business and not me personally, right?

That depends on YOUR states laws.
In my state, according to my CPA and attorney, there is some shield of protection... but not for malic or gross negligence.
To carry E&O or not is a business decision. Most lenders require it, but since I no longer do residential work for lenders, I no longer carry it for that purpose.

 

[Ariba]

If you are going to drop your E&O insurance and you have any concerns about any appraisal you have done in the past when you had a E&O policy, you might want to consider taking out Tail Coverage.

Tail Coverage is for that period of time specified in the policy wherein claims first made after termination of coverage under the policy term, for damages that occurred during the policy term, or that occur on or after the retroactive date.

In other words if someone makes a claim on an appraisal that you completed when you were covered under E&O but they make a claim after you terminate your E&O coverage you are not covered and the insurance company is not liable. E&O Insurance will only protect you if you have a policy in place at the time a claim is made against you.

Most appraisers when they retire and have E&O take out Tail coverage for a period of 3-5 years to cover them in case they are sued.

Talk to your insurance company before you cancel.

 

[Ariba]

Your questions are probably best directed to an attorney.

But I will tell you that an appraiser with E&O is much more likely to be sued than an appraiser without it. Few attorneys will waste their time suing a private individual, they'd much rather go after your E&O and settle with them.

Of course, you will never get any new business without E&O.

I have E&O and rarely think much about it.

Do you have any evidence to base this on? What if the private individual has assets, like a primary house, investments, etc.

 

[Lee Lansford]

Vicki,

I think that answer to your final question is "no". If you were correct, all that appraisers need do is incorporate and--presto!--no worries regarding lawsuits.

Corporations come and go...appraiser are "forever". If you believe that corporate status will shield you if one of your appraisals prompts someone to file a suit against you, I think that you can look to a sad surprise if you have no insurance and someone sues you.

Think about it...doctors may work for a corporation...but it is their malpractice insurance (and, perhaps the insurance of the corporation, too) that gets sued. Would you believe that appraisers have preferred status as compared to doctors?

Lee

 

[DTB]

Vicki,

I think that answer to your final question is "no". If you were correct, all that appraisers need do is incorporate and--presto!--no worries regarding lawsuits.

Corporations come and go...appraiser are "forever". If you believe that corporate status will shield you if one of your appraisals prompts someone to file a suit against you, I think that you can look to a sad surprise if you have no insurance and someone sues you.

Think about it...doctors may work for a corporation...but it is their malpractice insurance (and, perhaps the insurance of the corporation, too) that gets sued. Would you believe that appraisers have preferred status as compared to doctors?

Lee

Place your assets in a corporation and let them sue you individually all day long. Can't get blood from a turnip.

 

[The Warrior Monk]

Place your assets in a corporation and let them sue you individually all day long. Can't get blood from a turnip.

Only to an extent. If one commits fraud and places their assets in a corporation, don't count on the corporate shield for protection.