Real estate appraisers have a very particular set of skills; skills they have acquired over their careers that allow them to almost magically determine a property’s value.
With the boom, bust, rinse, and repeat in the real estate market over the last decade, the role of the real estate appraiser has become even more important and, unfortunately, even riskier. And with that risk, comes a need to protect yourself?
Luckily, you’re in the right place. Our independent agents have seen it all, and covered it too. And they’ll help walk you through every step of the process to get the best coverage at the right price for you. But first, let’s start with a bit of important background info.
Why Do Real Estate Appraisers Need Insurance?
Real estate appraisers face a number of different risks in their line of work — from the physical, to the financial. So having the right coverage to protect both should be your number one priority.
Physical risks to individuals and property are always lurking in the shadows as appraisers evaluate properties from every angle, like the roof, on a ladder, or in a tight crawl space. This goes especially for those icy, wintry months when trying to get a good look at every nook and cranny.
And then there’s the financial side of an appraiser’s risky business. Since an appraiser’s determined property value can be used for mortgage lending, tax assessments, real estate negotiations, and a number of other important financial dealings, all it takes is a small error to bring on huge consequences for the interested parties – and ultimately for the appraiser.
Make a mistake here and you could have to deal with legal battles and court appearances that could take a big hit on your business.
Real Estate Appraisers Risks Include:
- Causing physical damage to someone else’s property
- Causing injury to someone else
- Injuring yourself, an employee, or a contractor
- Improperly assessing the value of a property, thereby causing a financial loss for the buyer, seller, or lending institution
- Having a car accident in the course of doing business
Whether you’re a sole proprietor or a large appraisal company with its own employees, you need a variety of business insurance policies to protect you, your employees and your business assets.
What Kind of Insurance Does a Real Estate Appraiser Need?
Well, it depends. The specific types of policies and coverage you need come down to whether you are a sole proprietor or a small business. And if you’re a small business, do you have full-time/part-time employees or do you use independent contractors?
The good news is that it’s pretty simple to create a totally comprehensive set of policies that are tailored perfectly to your unique needs when you have the right help. Coverages to consider include:
- Commercial General Liability (CGL): covers the costs associated with a legal defense and covered judgments rendered against you if you, your products, your services or your employees cause bodily injury or property damage (for example, you damage the roof of a property you are inspecting). CGL insurance also covers costs related to claims of negligence, libel, slander, and advertising liability.
- Professional Liability/Errors and Omissions (E&O) Insurance: offers coverage for lawsuits related to negligence in performing professional services or in the failure to perform them. This coverage is recommended for real estate appraisers and any company that provides a service to clients for a fee.
- Workers Compensation Insurance: Workers compensation insurance provides income replacement and medical benefits to employees who are injured on the job. Each state has its own requirements, but most employers are required to purchase coverage. You can also, in some states, purchase the protection for yourself if you are a contractor or a sole proprietor.
- Commercial Vehicle Insurance: Business auto insurance is basically the same as your personal auto insurance policy except it protects vehicles and drivers associated with your business. If your business owns vehicles, this will cover it for costs associated with collisions or damage and provide liability protection if one of your drivers is at fault in an accident. Now, if you or your employees drive a personal vehicle for business, you’ll want to consider purchasing hired and non-owned auto liability coverage.
What is Professional Liability Insurance?
Professional liability insurance – or errors and omissions (E&O) insurance – protects professionals, their partners, their employees, and the business itself from damages after failing to provide professional services.
And in a world where people have become much more casual with their definition of “professional” and everyone sues everyone for anything, increasing number of businesses are becoming exposed to E&O lawsuits or claims.
Professional service businesses can be sued for a number of reasons, like: giving erroneous advice, service errors, negligence, or omissions that cause a client to lose money.
Real estate appraisers provide an important service in real estate transactions, and a substantial valuation error can lead to financial harm to one of the interested parties. E&O insurance is the way to protect yourself if you are sued.
Your CGL policy does not cover you for lawsuits related to the professional services you provide.
E&O coverage is needed for these types of claims in order to pay defense costs as well as any settlements or judgments against you.
Because of the many different types of businesses that need E&O coverage, there is no real standard policy language or a one-size-fits-all solution. Every type of business has unique exposures, and their E&O policies should reflect that.
E&O coverage can be purchased for real estate appraisers who work at a larger firm or for individual appraisers who act as contractors or sole proprietors. Working closely with your independent insurance agent will make sure your policy fits your needs and address the unique exposures of real estate appraisers.
Keep in mind, too, that a professional liability policy does not cover you for criminal, fraudulent or malicious acts; bodily injury or property damage; workers compensation claims; punitive damages; automobile liability; property claims; or any other general liability issues.
Your policy’s exclusions specifically reflect your professional liability risks.
What Is Hired and Non-Owned Auto Liability Coverage?
When it comes to real estate appraisers, the right business auto coverage might not be as cut-and-dry as it is with other industry pros. Are you a sole proprietor who uses your personal vehicle for work? Do you have employees or use independent contractors that use their personal vehicles for business purposes?
If your real estate appraisal business doesn’t own any vehicles, but you, or others, use personal vehicles while doing business, you need hired and non-owned auto liability coverage.
If you, or one of your employees, cause a car accident while working, the business can be held liable for bodily injury or property damage that occurs – even if the driver has their own personal auto coverage. Why?
Some insurance companies exclude business use from personal auto coverage; otherwise a claim may exceed the limits of the driver’s personal auto policy. Either way, the business needs coverage, too.
Hired or non-owned auto liability insurance protects your company if you are sued after an auto accident that you or your employee has in a non-company-owned vehicle while on company business. It covers bodily injury and property damage caused by a non-owned vehicle that is being used for business purposes.
You can get hired and non-owned auto liability on a standalone basis, even if your business doesn’t own any vehicles. You may be able to add hired and non-owned auto liability to your CGL or business owners policy as well.
Other Coverages to Consider
Depending on the unique services you offer, you may have other exposures and need for further coverage, including:
- Cyber liability insurance: As businesses of all sizes increase their Internet and social media presence, the costs associated with a single cyber breach can force a business to close its doors. And quickly. A cyber liability insurance policy can cover everything from legal and forensic services to public relations costs and liability judgments.
- Employee benefits: If you have employees, you should consider offering employee benefits – group health insurance, group life insurance, short- and long-term disability insurance, and more – to your employees.
Getting the Right Real Estate Appraiser Insurance You
Just like snowflakes and golf swings, no two real estate businesses are exactly alike. To find the best business insurance policies that meet your budget, you need to obtain a variety of quotes from different insurance companies and choose the combination of coverage and price that best addresses your risks.
When comparing quotes, be sure that you are comparing coverage for coverage. If one quote is significantly less expensive than another, it may be lacking in the protection you need.
The best way to make sure that your needs are met is to engage with a well-trusted, independent insurance agent who can act as your coach and your quarterback, so you can get back to running your business.
The Benefits of an Independent Insurance Agent
Independent insurance agents are kind of like the Google of insurance quotes. You tell them what you’re looking for, and they bring in the results. And since they aren’t tied down to one carrier, they’re free to shop around and bring multiple policy options to the table.
And it gets better, you don’t have to review the policies alone. They’ll walk you through everything you need to know about finding the right coverage, and price, for you. But it doesn’t end with your signature.
Along the way, if something bad ever happens, they’ll handle the entire claim process for you and deal with the carrier, so you can go about your appraisal business.