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.

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