Buy Real Estate Appraiser Insurance

Real estate appraiser insurance is a type of insurance that is specifically designed for individuals and businesses that provide real estate appraisal services. It helps protect against potential financial losses that may occur as a result of errors, omissions, or other types of professional negligence.

This type of insurance typically includes coverage for liability, errors and omissions, and professional indemnity, which can protect against claims related to wrongful conduct, damages, or other losses caused by the appraiser's professional activities. It can also cover the cost of legal defense, in case of a lawsuit.

The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small real estate appraisal businesses ranges from $37 to $49 per month based on location, size, payroll, sales and experience.

Real estate appraisers need insurance for the same reasons that any other business owner needs insurance: to protect themselves, their employees, and their business from unexpected events that could cause financial harm.

Real estate appraisers are professionals who are hired to assess the value of a piece of real estate, which can include residential homes, commercial buildings, and land. This process involves conducting extensive research and analysis to determine the market value of the property.

As with any business, there is a risk of liability for real estate appraisers. For example, if an appraiser makes a mistake in their assessment that leads to a financial loss for their client, the client may try to seek compensation from the appraiser. In this situation, insurance can help protect the appraiser from the financial consequences of a liability claim.

Additionally, real estate appraisers may also need insurance to protect their own personal assets and to ensure that their business can continue to operate in the event of unexpected events such as natural disasters or legal disputes.

Overall, insurance is an important tool for real estate appraisers to protect themselves, their employees, and their business from potential financial risks.

To adequately protect your business as a real estate appraiser you'll need a variety of real estate appraiser insurance policies in your insurance portfolio. Each insurance policy you get for your appraising business will cover a different type of risk.

Here are some of the different insurance plans you could get for your business:

Commercial General Liability Insurance - If your company gets a lawsuit and you're required to go to court then this the insurance you need. Having this insurance helps with the costs associated with legal defense and other judgments as a result of the trial. If an employee causes damage to a third party or their property, then this insurance will help to cover your business.

Professional Liability Insurance - Also known as errors and omissions insurance, professional liability is the type of insurance that provides you with protection against lawsuits due to negligence. If you fail to perform your professional duties successfully you can be held liable. Appraisers get many frivolous lawsuits for issues that originate after the home is purchased. For this reason having this real estate appraiser insurance is best. Being a real estate appraiser makes this the most important insurance you can get for your business.

Commercial Auto Insurance - Having this insurance protects the vehicles you use for your business. Many personal car insurance policies do not cover business use. This insurance covers any damaged caused by your business vehicles when driving to inspections and other meetings.

Non-owned Auto Liability Insurance - If an employee uses their vehicle to do work for the business, they will need protection while on the road. Non-owned auto liability insurance is how you will provide them with this protection. Having this insurance is important to keep your employees protected when they use their vehicles for business errands. So if they hurt someone and your business is sued you will have protection.

Workers' Compensation - One of the most important insurance policies to have for your business. Workers comp is required in many states for any non partner or owner employees. If an employee is injured while on the job and required to see a doctor, then this insurance helps with the costs associated with that injury. This insurance also offers benefits to the family if the injury results in a fatality.

Premises liability exposure is often very limited as most of the client contact is done over the phone, electronically, or by mail. Appraisers may spend a lot of time off-site at clients' premises, loss sites, or at premises undergoing valuation. There must be training and procedures for appropriate behavior. Complaints about appraisers should be dealt with quickly.

Professional liability exposures arise from the accuracy of the appraiser's analysis of the valuation information. If done in conjunction with a loss, claims settlements can involve millions of dollars. Independent insurance appraisers may have legal responsibilities to both the insurer and the insurer's policyholder and are sometimes party to sensitive negotiations. Real estate appraisers' calculations may have a significant impact on the salability and purchase price of a property. Hazards increase if the firm fails to conduct thorough background checks to verify employees' education and employment history.

Workers compensation exposure is based on the type of items being appraised. Since office work is done on computers, potential injuries include eyestrain, neck strain, carpal tunnel syndrome, and similar cumulative trauma injuries that can be addressed through ergonomically designed workstations. Travel may be extensive. Exposures increase with offsite work as the appraiser may work in damaged buildings or under other compromised conditions. Protective gear must be provided in certain circumstances. Appraisers may be injured in automobile accidents.

Property exposure is generally limited to that of an office, although there may be some incidental storage or an area for meetings. There may be considerable storage of property valuation documentation, diagrams, photos and similar records, although these are now often digital instead of paper format. Ignition sources include wiring, heating and air conditioning systems, wear, and overheating of equipment. Computers and other electronic equipment may be targets for theft.

Crime exposure is from employee dishonesty and various types of fraud to both clients and third parties such as banks, insurers, or real estate firms with an interest in the valuation of the property. The exposure can be quite serious as appraisers have access to individual customer's personal and proprietary information. Hazards increase without proper background checks and monitoring procedures. All job duties, such as ordering, billing, and disbursement, should be separate and reconciled on a regular basis. Audits should be conducted at least annually.

Inland marine exposure is from accounts receivable if the appraiser offers credit, computers, special floaters, and valuable papers and records for clients' and valuation information. Appraisers do field work which requires a variety of specialty equipment to do their valuations. The customers' papers on file may be originals that are difficult to re-create. A morale hazard may be indicated if the appraiser does not keep valuable papers and disks in fireproof file cabinets to protect them from smoke, water, and fire. Power failure and power surges are potentially severe hazards. Duplicates should be kept off-site to allow for re-creation in the event of a loss.

Commercial auto exposures will vary. The primary risk is from hired and non-owned vehicles as appraisers may use rental cars when sites to be valued are not local. If company vehicles are supplied for use, there should be written procedures in place regarding personal use by employees and their family members. All drivers must have appropriate licenses and acceptable MVRs. Vehicles must be maintained and records kept in a central location.

Real estate appraisers may be sued for a variety of reasons, including:

• Errors or omissions in the appraisal report: Appraisers may be sued if they make a mistake or omission in their report that results in financial harm to their client.
• Overvaluation or undervaluation of a property: If an appraiser overvalues or undervalues a property, it can result in the client paying too much or too little for the property, leading to a lawsuit.
• Failure to disclose a conflict of interest: If an appraiser fails to disclose a conflict of interest, such as a financial interest in the property, it can lead to a lawsuit.
• Negligence or professional malpractice: Appraisers may be sued for negligence or professional malpractice if they fail to adhere to the standard of care expected of them, resulting in financial harm to their client.

Real estate appraisers can protect themselves from these types of lawsuits by obtaining professional liability insurance, also known as errors and omissions (E&O) insurance. This type of insurance provides coverage for damages and legal defense costs in the event of a lawsuit resulting from professional negligence or errors and omissions.

For example, if an appraiser is sued for errors or omissions in their appraisal report, their E&O insurance can help pay for legal defense costs, as well as any damages awarded to the plaintiff if the appraiser is found liable. Similarly, if an appraiser is sued for overvaluation or undervaluation of a property, their E&O insurance can help cover the cost of legal defense and any damages awarded.

In addition to obtaining professional liability insurance, appraisers can also protect themselves by ensuring they are following the industry's best practices and standards. They should thoroughly research and analyze the property being appraised and provide a comprehensive and accurate report. They should also disclose any potential conflicts of interest and be transparent with their clients.

Furthermore, appraisers should maintain a high level of professionalism and communication with their clients throughout the appraisal process. By doing so, they can minimize the risk of misunderstandings and disputes that could lead to legal action.

Overall, while real estate appraisers may face the risk of lawsuits, they can protect themselves by obtaining professional liability insurance, following industry best practices and standards, and maintaining clear communication with their clients.