appraiser insurance

Appraiser Insurance: The Three Policies You Need for Your Business

As a business owner, having insurance is critical to protect you and cover the risks you face in the profession. Help you feel more confident that you have the right coverage, we’re going over the types of appraiser insurance you need and why you need it.

  • Errors and omissions insurance (E&O)
  • General liability insurance
  • Commercial property insurance

For a deeper dive into errors and omissions insurance, watch the episode of Beyond the Numbers below!

The three types of appraiser insurance

Errors and omissions insurance

Errors and omissions (E&O) insurance may also be known as professional liability insurance. This type of coverage protects appraisers financially if a legal claim arises due to a mistake at work.

Why is E&O insurance important?

Errors and omissions insurance matters to appraisers because your job is to creates valuations for properties. Small mistakes or oversight may result in a client filing a lawsuit against you, and if they win, you can face big financial losses.

E&O insurance protects in cases of:

  • Valuation mistakes
  • Inaccurate information
  • Negligence
  • Mistakes made with personal and confidential information
  • Cases where the wrong value of the home is given
  • Incorrect submissions of assessment

Lawsuits can be expensive and while we hope you never face one, the truth is that it may happen. Having E&O insurance saves you from having to pay out a large settlement in the event of a lawsuit. It’s important to note that this type of appraiser insurance does not cover claims for property damage, bodily injury, data breaches, or criminal acts.

Like all appraiser insurance coverage, E&O costs will vary from appraiser to appraiser. Pricing is likely to be dependent on the size of the appraisal business, how many claims have been filed, how much revenue is coming in, location, and employee training.

General liability insurance

Simply put, general liability insurance is a type of insurance business owners, in this case an appraisal company, get to keep safe from financial liabilities associated with day-to-day risks.

Why is general liability insurance important?

Without general liability insurance an appraisal company may be responsible for paying large out-of-pocket expenses for things like:

  • Legal fees
  • Medical bills
  • Property damage repairs
  • Compensation to injured parties
  • Reputational harm
  • Advertising injury

While E&O insurance protects you in the event of a professional error, this type of appraiser insurance provides coverage for claims that occur as a result of the business’s activities, products, or services and are mostly used in third-party disputes. General liability insurance typically assists with legal defense costs, settlements, and judgments arising from covered claims.

General liability insurance policies can be tailored to meet the needs of each business specifically taking into account things like industry risks, business size, and the location of operations. It’s important for you to carefully review their insurance policies to understand what is covered, any exclusions or limitations, and the appropriate coverage limits for their needs.

These exclusions likely include:

  • Work-related injuries for employees (that’s workman’s compensation)
  • Professional mistakes (that’s E&O insurance)
  • Damage to the company’s property

Much like errors and omissions insurance, general liability insurance for appraisal companies will vary in cost based on everything mentioned above.

Commercial property insurance

This type of appraisal insurance keeps the physical aspects of your company safe. If you have an office (yes, a home office is included in this), commercial property insurance will keep you from being financially liable to damage to the property.

Why is commercial property insurance important?

Life happens, right? When the unexpected happens at your office, the last thing you want to deal with is paying out of pocket. Commercial property insurance covers the cost when it comes to:

  • Fire/Explosion
  • Vandalism
  • Storm damage
  • Theft
  • Pipe bursts

In the event that one of the above takes place, insurance will help to replace:

  • Tools
  • Equipment
  • Landscaping
  • Inventory (if applicable)
  • Furniture
  • Electronics
  • Personal property

We should note that floods and earthquakes are not likely to be covered with commercial property insurance. These can be added on but aren’t going to come in a standard policy. When it comes to getting a commercial property policy, price will depend on:

  • Occupancy
  • Location
  • Construction
  • Weather patterns
  • Fire protection
  • Theft protection

As shown above, appraiser insurance matters, not just from a regulatory perspective, but from a personal asset perspective. Whether it’s errors and omissions, general liability, or commercial property, having the proper insurance help can save a business in the event of an emergency or mistake. Not having it can be costly and can also cause clients to lose confidence in both the appraisal company and the appraiser.

To make sure that your company is properly covered, get a few different quotes and go over all the details before choosing your policy. Remember, the cheaper option isn’t always more cost-effective in the long run!

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