Should I consider this an actual claim?
Q: "I am filling out my renewal application for E&O insurance and have a
question. I just remembered that someone called me a few months ago to complain
that I had made a mistake on an appraisal I did some years back. I did not even
know who the caller was and told him to send me something in writing. I received
his written demand, and It turns out this guy was the buyer of a property I
appraised in 2006. He was now selling his home and listed it as having 3800
square feet, because that was what I said on the appraisal. He had a contract
for $480,000 and now the appraisal done for the buyer’s loan came up with 3782
square feet. This guy needed to sell the house so he renegotiated the contract
and dropped his price down to $475,000. He expected me to make up the difference
and threatened to sue me if I did not send him a cashier's check in 10 days.
That was 5 months ago and I have heard nothing since. Should I mention this in
my renewal application?"
A: The answer is "Yes". There is a question on your application about whether or
not you have had any claims in the past 10 years. This does count as a "claim"
because the person made a demand for money. You need to answer the question and
send the carrier a copy of the letter for their files. Just because you have not
heard from this guy in some months does not mean you can be sure he has gone
away. He could still file suit against you or maybe make a complaint to the
state board. You need to give proper notice of this to the insurance company so
as not to jeopardize coverage if something does come of this down the road.