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E & O Insurance

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Curtis Armstrong

Freshman Member
Joined
Feb 21, 2003
Hi everyone!

I am starting to work with an AMC that requires E&O Insurance from all of their appraisers. Do you guys know of any other companies that require proof of insurance on all reports? Is their a waiver or disclaimer that they can have me sign instead?

Any help would be appreciated

-Curt :p
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Unless they guarantee me a minimum of work, I would eschew the insurance provided you do not otherwise think you should have it. I work for an Ark. bank owned by a family that also owns a bank in Okla. which requires E & O. They told me couldn't use me but lo and behold, when they have one in Ark. and cannot find an appraiser they waive the requirement.

Some of these clients want you to put them on as an additional insured and that can cost more.....I would make them pay any excess up front or they can call someone else.
 

Michael Reilly

Junior Member
Joined
Jan 15, 2002
Curtis, do yourself a favor and get the insurance it would be irresponsible of you not to! Besides the request is not uncommon, in fact quite frequently asked until you have a client base, then only upon expiration do you have to send updated proof. God forbid you are ever challanged, you need that safety blanket. Would you drive a car with out it?

MReilly-NY
ACE
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
Starting out, I didn't carry E&O. Was broke, had no assets, and only had one lender ask about it. So, I didn’t get any work from them. But as my bizniz grew, I saw the need to cover what I have built. Funny thing is, it wasn't until I got insurance, and said I had it on the "vendor/appraiser updates", that they took interest in having a copy of the deceleration page. However, it is a necessary evil to protect your assets..... if you have any.
 

Lee SW IL

Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
I have E&O, but, I do not hand it out to every Tom, Dick and Harry.

Some clients I give it too, others I don't.
 

Jeff Horton

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
There is a company, The Noble Group, that will let you pay on a per job basis. I had one client that required I carry it. I took it out for them and I looked at just buying it on their jobs. I talked the company and they didn't recommend this method but they would let me do that. You have to turn in log along with the fee once a month ON TIME of they don't cover you. I think it is $9 or $10 per job?
 

Ross (CO)

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Curtis, .......Sure, having E & O is probably the smart thing to attain. As for a "waiver or disclaimer", I am not sure what you mean. One either has a policy of their own, or protection under policy of an office group (mentor), or none at all. Most clients do not require (proof of) your having E & O, and most never ask about it. Generally, if the client has asked for your license copy and E&O declaration once, in the beginning or your working relationship, you will NOT be expected to also provide with each and all reports you submit. I just sent in my papers for an approval process with a prospective client. Sure enough, they asked for declaration of E & O coverage, ie. send us that declaration page. While you could tell them verbally that you have coverage, why would they still insist that you send in hardcopy proof ? ( Here's their kicker, if you have covereage, send the declar. page, and if not covered, no declar. page needed. Huh ? ) I included the page with the others they needed, but did what my carrier SUGGESTS one do. I blacked-out the numbers after the $-sign which clearly define the limits of liability, and the amount of my annual premium to left of the decimal point. Your client does NOT need to know those numbers ! You HAVE coverage and that is sufficient.
 

Michael Reilly

Junior Member
Joined
Jan 15, 2002
Curtis, IMHO building a business in this industry whether a multi appraiser shop or an independent operation, at least in the states we cover those who lend funds (wholesalers or portfolio lenders) usually require and approval package of some kind and in many cases they want to see E&O insurance. While many lenders maintain approval lists, that number has and continues to decrease. We leave nothing to chance when developing new relationships and provide everything from a letter from the President to a list of appraisers/apprentices, insurance declaration, resumes on everyone (including updated continuing education), licenses, referral letter or reference contacts, 3 testimonials, price schedules, coverage areas, order forms and online ordering procedures a brief summary of our internal review system and a pull-out service agreements (for the originators) to fill out and sign if they want to establish payment terms, etc. etc. etc….all bundled up in a neatly bound indexed package for their review. Presented properly (add in business cards and/or other collateral material) it’s hard to get turned down for inclusion on any wholesalers list. It’s a little time consuming in the beginning but becomes quite easy to maintain if you’re smart about it. You never want to get caught off guard by leaving something to chance or by giving someone the opportunity to question or make additional requests, that whole first impression thing. At least that’s how we do it and we have no problem developing new relationships at will.

Full Fee Is For Me.

Mreilly-NY
ACE
 

Pam Wyant

Senior Member
Joined
Feb 12, 2003
Professional Status
Certified Residential Appraiser
State
West Virginia
In today's lawsuit oriented society (McDonald's made my kid fat - ring a bell?), it is extremely risky not to carry E & O. My personal story, and I don't mind sharing it, because I am not at fault. I am currently being sued for $550,000 for a foundation defect on a $112,000 property (with a large portioin of the value in the 40 acres of land) - despite the fact that the summons states the buyer could not have readily detected the problem in a duly diligent inspection, and despite two disclaimers in my report that I am not a home inspector and recommending a professional home inspection. Sure, I'll probably get out of the suit at some point, but in the meantime, my E&O is paying my attorney fees. Another local appraiser shared his experience - he won when he was sued, but not having E & O, spend over $7,000 on attorney fees out of pocket. Makes that $500 (or so) investment real wise.
 

Dee Dee

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Pam,
Thanks for sharing your story.
Though most of us try to be diligent in our work, sometimes we can't out-smart a homeowner who wants to hide a deficiency.
I can't tell you how many times I've gone into basements that have big bookshelves against the wall (too big to move) or wood piles stacked against the outside of the house that could be deliberately hiding a problem. I can't pull up the carpeting in every basement to look for cracks in the slab. The list goes on and on.
In this sue-happy world, any logical appraiser needs to realize that the odds are growing that they might find themselves named as a party to a lawsuit, regardless of how thorough they might be or how many disclaimers they put into their reports.
 
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