E&O - What's happened to rates

[Truett D. Neathery]

Just off-load your assets! Go to the Nevada Incorporation sites. Don't believe urban legends.

Ask the requestor for their E and O, covetring everyone from the mail boy to the board of direcors.

 

[Anonymous]

...and the number, place and design of all body tattoos.

 

[Julio E. Sune Jr. (FL)]

From: The Communicator-"Appraisers Doing The Time"
Author: Steven Smith--MAI

"Lenders use the errors and omissions insurance of apprasiers as a kind of free substitute for mortgage insurance, allowing them to make riskier loans. This enhances their portfolios by providing higher yields and profitability, which raises their stock price.

A lender selling a portfolio of loans in the secondary market may obtain a better price when they provide copies of errors and omissions insurance for the appraisers.
If a lender suffers a default they can readily sue the appraiser and obtain a settlement from their insurance carrier. Insurance companies take into account the costs of going to trail, the likelihood of not being able to defend the insured successfully and the possibility of a high judgment award. The insured has no say in the settlement, even if they feel they are not guilty. Their choice is to either fund the continuation of their defense themselves or to allow it to be over and done with. Few if any staff or review appraisers maintain errors and omissions insurance, though there have been many suits filed against staff appraisers and reviewers after they leave their employers. These appraisers are paying their own attorneys fees. This makes an argument for maintaining insurance, even if employed, because the annual premium
is less than defending against any one suit." :twisted:

 

[Mike Garrett RAA]

I agree with Paulette... why have a million dollar policy?

Out state has mandatory error and omissions insurance requirements for both real estate brokers and appraisers with $300,000 minimum coverage required. The policy cost $100 a year!

You should, no let me say....MUST protect yourself with E & O coverage. If you feel you make enough mistakes to need a million in coverage, go for it. In my case, I feel $300,000 is enough.

 

[Dave Smith]

I fairly regularly appraise properties in the $600,000 to $2,500,000 value range so I think $1,000,000 in coverage might be a wise move.

I'm no millionaire but I don't want to be a pauper either, if some high roller comes after me for a percieved mistake.

High rollers sometimes tend to go for high stakes when upset about something. We all know how easily property owners get upset about values.

I'd rather spend the difference between minimum coverage and $1,000,000 coverage and keep most of what I have if I were ever sued.

Just my $.02 worth.

 

[Paulette in Texas]

Dear Dave: As you regularly appraise higher end properties than many of us...when it makes cents and more sense, go for it. We tend to only do a few properties a year in the $400,000 to $1,000,000+ price range. If we did more, we'd raise our coverage. As we bend over backwards to support our value in these price ranges, any error we feel we may make, is just that. $300k ought to cover it. Of course, we don't get to do too many as we expect to be compensated at a higher rate and these national companies tend to be tightwads. We see no reason to spend 3 times as long to do the report in research, drawing & writeup and get minimal compensation over & above our regular. But we like them when we do them. Have a great one. Paulette in Tx
go w...
Rotts rule, Shih tzus holding in there.

 

[Russ]

I have no problem with E & O insurance. I am on 99% of the major lenders approval list and set up a corporation that always has minimal equity and cash just in case! Solid clientle base and busy as ever all without E & O insurance! (never had an appraisal rejected because of lack of E & O insurance)

p.s. I do not think that Colorado requires E & O insurance but I could be wrong.

 

[Richard Carlsen]

I'm with Paulette.

I only carry $300,000. So what if I do a $1MM house. Is it likely that I will do a $1MM mistake or incur that much liability on such a house? I seriously doubt it. More mistakes are made in the $100,000 range.

If I were doing income or commercial, then I would consider higher coverage but not to do $60K to $300K houses.

 

[Dee Dee]

Hmmmm....
After reading some of these posts I'll have to reconsider how much insurance to purchase in the future.
It was drilled into my head as an apprentice that I should have $1,000,000 in coverage from my mentor, but since they were the one who would have been liable for any negligence on my part at that time I could understand why. Rookies make mistakes.
Since my appraisals are mostly for homes that are under the $500,000 value range it does seem a bit absurd to have so much coverage.
:? :?

 

[Rich Heyn]

Why carry more E&O than the value of the most expensive homes typically appraised? After all, the worst they can do is sue me for the value of the house, right?

Maybe not.

My kids are sick because you didn't notice the mold.

The family died of carbon monoxide poisoning from the cracked HTPV pipe which you failed to mention in your report.

My child was molested by the registered sex offender next door. You should have discovered that and mentioned it in the report.

Etc.............

Rich Heyn