Monday, February 3, 2014

General Liability Insurance for Real Estate Appraisers

Many appraisers are now being asked to carry general liability insurance by their clients -- in addition to the professional liability insurance that has been a standard requirement for many years.  This is partly the result of the OCC's new Risk Management Guidance for banks under its jurisdiction. The OCC's Risk Management Guidance was issued as a bulletin on October 30, 2013 and applies to the "third party relationships" that banks have with outside parties to whom they outsource services or functions.  This includes appraisers and AMCs.  As a result, we are seeing new insurance requirements appear for appraisers and appraisal management companies in service or contractor agreements with banks

As for appraisers, the most common change that we are seeing is that banks (or their AMCs) are often now requiring that appraisers carry CGL (commercial general liability) insurance as well as the E&O (professional liability) coverage that is almost a current universal requirement.  The typical limit required for CGL is $1 million per claim/occurrence.    

What is the typical additional cost of coverage to an appraiser for general liability insurance?

The risks covered by general liability insurance (property damage, bodily injury and similar types of harm) are less common than the types of harm covered by an appraiser's E&O policy.  For that reason, general liability coverage is usually less costly for an appraiser than his or her E&O.  As an example, if LIA insures the appraiser for E&O also, we are able currently to sell an appraiser general liability coverage at the lowest end for about $300 for one appraiser.