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No E&O or Pro E&O

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Steve Owen

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
Missouri
I know this subject has been discussed before, but I couldn't find the info I was looking for in the archives. Anyway, I'm not sure it has been discussed before in quite the way I'm looking for. Usually, it seems, when the subject comes up, someone is looking for a good, cheap carrier.

But, I remember someone, I think maybe Terrel, making a very good argument for not carrying it at all.

I also remember someone else (Richard? Dee Dee? Blue1? I'm not sure) making a, more or less, absolute statement that you should not provide your policy coverage to an LO under any circumstances. (I believe the point was, if they're going to sue you, make them work for it.)

Now, my mentor never carried E&O. His point of view was, if you do your work right, you can defend it. Anyway, what you are giving them is an opinion and it would be awfully hard to prove in court that it wasn't your opinion. And finally, carrying it is just inviting someone to sue you (by going for the deep pockets). Having been sued before, I can really identify with this last one; but I really don't think I buy the entire line of reasoning.

I'm not going to take a poll on this, because I'm not interested in the numbers. (I won't make this decision or change my mind based on how many people are doing what.) Rather, I would be interested in some good pro and con. Why do you carry E&O, or why do you not. Do you provide policy information to clients? Why or why not? Does anyone know whether it's legal or illegal, or perhaps more appropriately, ethical or unethical, for a client to demand that you carry it? (My mentor had a couple of clients who had a requirement for E&O in their engagement letters. He would just scratch it out, and initial where he did it. I can't remember a single time that anyone ever cancelled a job [or failed to order future ones, for that matter] because he did that.)

If you hadn't guessed, I'm giving some thought to changing my policy on this issue (no pun intended). Terrel, Bobby Bucks, Pamela, George Hatch, if you're out there, I would be especially interested in hearing your various points of view. (Is that allowed, Wayne?) If I didn't mention your name, please don't be offended; there are plenty of others I would be interested in hearing from on this.
 

Atlanta CG

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
Most of my clients simply require it and keep a copy in their records. Also, $495 annually beats having to pay a lawyer even for a frivilous lawsuit.
 

Rob Bodkin

Junior Member
Joined
Nov 9, 2002
Professional Status
Certified Residential Appraiser
State
Washington
I have always had E & O since I went out on my own and while there are times, usually when I write the check in January, that I wonder if it is worth it, I think overall it makes much more sense to have it and not need it than to not have it and need it.

While I understand the statement that "if I do good work, then I would not need it" I am not so self-decieved as to think that I might not make a mistake. They happen.

I would not drive without insurance, I would not own my home without insurance and it seems like a risky proposition to go into our work, especially at the pace we are at now, thinking I was bullet proof and could not miss something.

The way I like to look at it is that as long as I do work that stays within my sense of integrity all I have to worry about is either honest mistakes or conditions that I could not see or have forseen. Either way having E & O seems to be a more appropriate choice than not.

That's my 2 cents. Thanks for the oportunity to chime in.

Rob Bodkin
Freestone Partners
 

Jo Ann Meyer Stratton

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Arizona
I agree with Rod and John. When I fax the info to a client, I white out the premium and the coverage amount--the client doesn't know if I am insured for $1 or a millons that way.
 

TC

Elite Member
Gold Supporting Member
Joined
Jan 31, 2002
Professional Status
Certified Residential Appraiser
State
Pennsylvania
The majority of my clients ask for a copy of my E & O every year. If I don't have it, no work. Just think of the premium as a couple appraisal fees, it's not that expensive for peace of mind.

TC
 

Dee Dee

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
My husband and I have worked very hard to get to where we are now. It would be a devasting blow to lose it now because of one mistake.

My reason for carrying E&O is that I don't want to start all over again at this stage in my life. Someday I hope to retire and leave something for my kids and/or grandkids. It's not just to protect my future, but also that of my family.
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
Steve:

I do not carry E&O, I can think *maybe* two assignments in the last two years I have lost in disclosing to a potential cleint that I do not carry E&O. (as in I recall one for sure, the second might not even be true) .... I have taken any number of assignments from clients that 'require' E&O with submitted disclosure that I do not carry that product, and occasionally submit my three paragraph letter as to why I chose not to carry. I can think of exactly ONE cleint from whom I would have prefferred to solicit work who stated that they could not accept my work without E&O, that was several years ago.

E&O policies are covering less and less, and the insuror takes complete control if/when you DO get sued. Read the new policies coming out, you are on your own for mold, environmental hazard, and most of the other common suits. You also have no say in why or how your defense gets played out.

The only persons I actually know in my market area who have been sued are those who maintain E&O, and those were all 'nuisance suits'. The ones who SHOULD have been sued - didn't get the opportunity to explain thier work before a judge... pity :evil: . the ones who got sued all have a settlement on the books, and had no say in whetehr it should have been settled.

All that having been said I tend to believe the folks at a prominant coverage company who state that there are two kinds of appraisers: those who have been sued and those who will be sued. Some of my analysis is based on local conditions: few people GET sued, and the $$ involved is generally quite small.

Personally, I think it more prudent to carefully watch our quality and USPAP compliance, then bank policy funds against the time when it 'might' happen. Insurance is nothing more than legalized gambleing, it is all where you place your bet(s).

The process of blacking out and refusing to sign idiotic employment agreements is something more of us should partake in. You shoulda SEEN the tattered remains I sent back to a major player recently. I get work from them. I have refused to sign and caused fusses with other companies over idiotic 'agreements' Have made several reps read what they are asking you to sign and the VERY lame response is - well our lawyers drew that up, I never read it :evil: - MOST will admit that after reading it they wouldn't sign either :twisted:

BTW having a family trust which shelters the majority of your real and much of your personal property is not a bad bet. hint. hint. hint.
 

Roger

Junior Member
Joined
Jan 24, 2002
Professional Status
Certified General Appraiser
State
Missouri
It seems the topic of E&O comes up on a regular schedule here.

I never have, however, seen any posts from people that have had claims on their E&O, and what kind of service they have recieved from their carrier.

My question is not if I should carry E&O, but what can I expect to recieve in service, if and when I ever need it?
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
Roger:
Take a few minutes and read, and I mean really READ your or a competor's policy and then ask some hard questions of the insuror. You might be very surpised at what you find out.
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
Look at the ambulance chasers on TV then tell me that E&O coverage is not important. In this day of declining values, environmental claims, and people looking for the jackpot at the end of the lawsuit, an E&O policy at the price of less than 2 appraisals is only good business sense. If you get sued, you are out the cost of an attorney even if you win. If you lose because you are using an attorney who doesn't understand the business, then they're coming after you, not your carrier.

It's no different than having auto insurance. You don't plan to have a wreck and you may not have had one for 20 years. But, you don't know about tomorrow.

Roger
 
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