|“One of the best courses that I have had in 17 years!”
Editor’s Note: Wishing you and yours a blessed holiday season and a happy and healthy New Year! Beginning in January: 14 Hrs. Free CE for OREP insureds. Plus, lower E&O rates/broader coverage in 2019! Shop OREP to see what you’re missing!
Insurance Happy Ending
By David Brauner, Senior Broker at OREP
The Hallmark Channel is not the only place to find a happy ending this holiday season. It happened this week at OREP and it’s a story worth sharing.
A few months ago, Appraiser “X” got most of the way through their renewal application but didn’t complete it: they returned their signed and dated renewal application, even arranged financing but there was one outstanding form they needed to sign and send back in order to bind. It’s called a “No Known Loss Letter,” which is exactly what it sounds like: a statement attesting that there are no unreported incidents or possible claims floating around that the carrier needs to know about before they take on your risk. Maybe you have seen one. They read something like this: I CERTIFY THAT THERE HAVE BEEN NO LOSSES, ACCIDENTS OR CIRCUMSTANCES THAT MIGHT GIVE RISE TO A CLAIM UNDER THE INSURANCE POLICY WHOSE NUMBER IS SHOWN ABOVE. The form is signed and dated by the insured and becomes part of the file. Despite our reminders, this simple form was never returned and therefore the renewal policy never bound. Claims Made insurance is why that can be the source of a very big problem.
Claims Made Insurance
As you may recall, when you let your Claims Made Insurance policy expire without renewing it (or without moving coverage to another carrier/policy that provides “prior acts” coverage), coverage for all the work you have done under that policy is gone- going all the way back to the policy’s inception. For some appraisers that can mean losing a decade or more of appraising- all gone because the policy was not renewed before it expired. There are no E&O policies that I know of for appraisers that are not Claims Made, so because they all are, this story matters to you. (Note: if you’re retiring, you can buy “tail coverage.” Call OREP or your agent if you need help.)
So appraiser X’s policy expired due to their simple failure to return the last piece of documentation needed to bind. They slipped up and this is not as rare an occurrence as you might think when it comes to our business. As for this pesky “No Known Loss Letter,” as one of our agents is fond of saying- at least privately to her fellow agents: “The carrier is willing to extend the insured $1 million coverage, asking them to sign and return one simple document is not asking too much!” Be that as it may, a few months after Appraiser X’s policy expired, they received formal notification of a claim and called to let us know. Most of the time, when this happens and the policy is expired, the news is not good because the claim will not be covered even though the appraiser had insurance when they did the appraisal. It’s a hard phone call to make.
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However, in this instance, we were all very happy to let the insured know that even though they had inadvertently let their policy expire, this claim most likely would be responded to because when the problem first arose- nearly a year prior, they did report it to the carrier and to us. It’s on the record. So even though they mistakenly let their policy lapse and lost their back coverage, this issue should be responded to by the carrier because their insurance (and yours) is Claims Made, and because the claim/incident was reported while the policy was in force. A Hallmark happy ending for sure.
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About the Author
David Brauner is Publisher of Working RE magazine and Senior Broker at OREP, a leading provider of E&O Insurance for appraisers, inspectors and other real estate professionals in 50 states (OREP.org). He has provided E&O insurance to appraisers for over 25 years. He can be contacted at email@example.com or (888) 347-5273. Calif. Insurance Lic. #0C89873. Visit OREP.org today for comprehensive coverage at competitive rates.
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