Frequently Asked Questions
Responses are based on Liberty Surplus Insurance Corp (Liberty) and Liberty Insurance Underwriters, Inc. (Liberty) Real Estate Appraisers Professional Liability Insurance Policy terms and conditions, limitations and endorsements and you should confirm with your insurance agent how your policy would respond.
LEGAL / CLAIM QUESTIONS
My Client Requested That I Include A Copy Of My License And E&O Insurance
Declarations Page In Each Appraisal Report
We recommend that you do not include a copy of your license and E&O insurance
declaration page in each appraisal report (to protect your personal
Some lenders have required inclusion of these documents in appraisal reports for
many years and whether an appraiser decides to comply with this request is a
business decision to make. If this request comes from an important client you
may decide to comply with their request, if you do decide to include these
documents in your appraisal report it will not jeopardize your coverage under
your Liberty policy.
We suggest that you attempt to negotiate an alternative with your client, e.g.
fax a copy of your declaration page or a certificate of insurance upon renewal
of your E&O insurance every year for their records.
If I'm sued, do I hire a lawyer or do you provide one?
In the event of a covered lawsuit or threat of a lawsuit, our National Claims
Counsel will appoint an attorney in your area to represent you. Our attorneys
all have experience defending real estate appraisers.
I have someone threatening to sue me although I don't think they are really
going to do it because what they are saying is false and I have documentation to
prove it. Should I submit this as a claim?
Yes, you should report it. You may not have done anything wrong, but that will
not prevent someone from suing you. Your instinct may be correct and the angry
party may never file a lawsuit against you. However, if they do, you will have
to retain an attorney to defend you and even if you are not liable, the attorney
must be paid. Also, if you don't report it when you are first notified of a
problem, and you notify us at a later date after it develops into a lawsuit, the
insurance company may decline coverage for the lawsuit due to late reporting,
depending on the circumstances of the claim.
My Client Wants Me To Sign An Indemnification Agreement (Back to Top)
Many appraisers are asked to enter into contracts that contain an indemnity or
hold harmless provision.
We would like to emphasize that signing an indemnification agreement does not
change your E&O insurance coverage and does not "void" your E&O insurance
policy, as some appraisers fear. Your E&O insurance policy will still provide
the same degree of protection and coverage as if the agreement did not exist and
would still defend a claim against you alleging professional negligence in
connection with your appraisal work. However the additional, potential risk and
cost that may result as a consequence of this agreement would remain your sole
responsibility and cannot be passed on to your E&O carrier.
The provisions of the policy issued to you by Liberty would not provide coverage
to any of your clients pursuant to an indemnity or hold harmless agreement that
you may have signed. Further, the policy would not provide any additional
coverage to you for any added expense or obligation which you incur as a result
of such an agreement.
The reasons for the positions above are found in the policy. First of all,
Liberty's insurance is afforded to only the company or those individuals that
fall within the definition of "Insured" found in the policy. The definition of
"Insured" does not include any of your clients. In addition, the EXCLUSIONS
portion of the policy clearly indicates that the insurance does not apply:
"...to any claim based upon or arising from the liability of others assumed
by the Insured under any contract or agreement, unless such liability would have
attached to the Insured even in the absence of such contract or agreement;..."
Whether you sign the document is a business decision for you to make. If the
request to sign such a contract is made by an important client, you may decide
to sign the document and accept the associated additional risk.
If I don't renew my coverage this year, will I still be covered if someone
decides to sue me next year? (Back to Top)
This question is one of the most misunderstood items about E&O insurance. Most
professional liability / E&O policies are written on a Claims-Made basis. In
order for a claim to be covered two requirements must be satisfied. First, the
appraisal had to be completed after the retroactive date of the policy; second,
the notice of claim must be presented to the E&O carrier while the policy is in
If you cancel or decide not to renew your coverage, you no longer have an active
policy and therefore the claim might not be covered.
When do I qualify for Prior Acts Coverage? (Back to Top)
Retroactive or Prior Acts coverage is available to individual appraisers or
appraisal companies who have maintained continuous claims-made E&O insurance.
This is the industry standard for offering retroactive coverage and it is the
standard followed by LIA.
Retroactive or Prior Acts Coverage cannot be purchased if you did not have
continuous E&O insurance in force.
What is tail-coverage? (Back to Top)
Tail coverage is the layman's term for Extended Reporting Period coverage. Most
professional liability / E&O liability policies are written on a claims-made
basis, which means coverage will only be provided for claims presented during
the policy period. Therefore if your policy expires, is cancelled or non-renewed
you will need to purchase tail coverage* or Extended Reporting Period (ERP) to
protect yourself against claims received after the policy period expires. The
ERP will cover claims made after the policy expiration date against appraisals
completed after the retroactive date, as long as the claim is reported during
the ERP. The ERP is typically offered for a period of 12, 24 or 36 months, and
some policies will offer unlimited (retirement) tail.
* If you purchase replacement claims-made E&O coverage with the same retroactive
date as the expired policy, ERP may not be necessary.
What is the difference between Occurrence and Claims-Made Coverage? (Back to Top)
An occurrence policy covers wrongful acts that occur while a policy is in force,
regardless of when the claim is made. The only trigger for a claim to be covered
under an occurrence policy is that the wrongful act must have occurred while
coverage was in force.
A claims-made policy covers only claims made while a policy is in force. There
are two triggers for claims made coverage to apply. The appraisal report
(wrongful act) must have been completed after the retroactive date, and the
claim must be reported while the policy is still in force. Timely notice of a
claim is required, and coverage may be jeopardized if it is determined that
timely notice was not provided to the insurance company.