State Board Complaints: Does It Mean the End of Your E&O Coverage?
Q: "I've heard from some of my colleagues that once you get a State Licensing Board complaint you can basically count on your E&O non renewing you? Is that true? Don't I at least get the benefit of the doubt? Wouldn't they at least wait to see how the Board decides on the complaint before they make a coverage determination?"
A: I can't tell you what every insurer does. I have also heard rumors that some companies do send out a Notice of Non-Renewal simply because a Complaint was made. If that is true, I would have to agree that is premature and unfair. Unfortunately, people get angry over some very petty things and the State Boards make it so easy to file Complaints. In most cases, all you have to do is fill out a simple online form and hit "submit".
First of all, many of the States are so backed up that appraisers are forced to wait well in excess of a year before the investigation is completed...in some states it can take as long as 3 or even 4 years. The accusation is bad enough, but then having to wait for a resolution, just makes things worse. We are not going to compound the appraiser's stress by adding a Non-Renewal Notice to everything else.
In our experience, less than 10% of the Complaints result in any discipline...so we really do have to give the appraiser the benefit of the doubt. In the majority of cases, the Complaint was made by someone who was simply annoyed and wanted to make things difficult. That is not a basis for Non-Renewal. We are here to help our insureds not to make a stressful situation even more difficult for them.
Make sure you give your insurer notice as soon as you receive the Board Complaint. If at some point during the investigation you need the help of a local attorney, you don't want to jeopardize your coverage, and risk not getting reimbursed for those attorney's fees, because you didn't give timely notice.
More "Claudia Says..." Q&A Series