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Editor’s Note: This story is reprinted from the current print edition of Working RE magazine, mailing now. (Am I a Working RE Subscriber?)
Insurance IQ: Reading Your Policy
By David Brauner, Senior Broker at OREP.org
Why is reviewing your E&O insurance policy important? Isn’t that my job as your agent?
Yes, it’s OREP’s job to review your policy and Declarations Page for accuracy as your insurance agent, and we do, but you can help yourself too. Let me give you a couple of real life reasons why reviewing your policy is important, no matter who your agent is.
At the very least, make sure your retroactive date is correct. This concerns how many years back your coverage goes, which is important for an appraiser because claims can happen many years after the date of the report.
About three years after opening OREP I was renewing my own E&O policy, which I need to operate my business just like many of you. Without it, I can’t do business. At that time, I had three years of continuous coverage, meaning my Retroactive Date (retro date), also referred to as a Prior Acts date, should have gone back three years, meaning my coverage should have gone back three years for all the work I did over that time. When I reviewed my own Declarations Page that year after receiving my policy, I noticed the retro date was gone! Meaning that to the carrier, I had no back coverage. I remember verifying at the time that I had filled out my application correctly, including my Prior Acts date. The agent made the error. I had to resend (fax in those days) the previous Declarations Page to prove my case. If I had missed their error and a claim had arisen from those prior years, it would have been a mess for me to prove I had coverage without an accurate Declarations Page. This is one reason why it pays to check your retro date when you receive your policy.
We get questions from appraisers switching to us from other agents, more often than you’d imagine, that go something like this: They say, “I’ve been with (the other agency) for ten years; I have prior acts going back that far.” But when we review their Declarations Page it may go back only three or four years. What? Somewhere along the line, these appraisers let their policy lapse/didn’t renew in time and they lost their prior acts. When they “renewed” late (after letting their policy lapse) maybe the previous agent didn’t catch it or chose not to poke a hornet’s nest.
At OREP, we take your prior acts coverage very seriously, issuing many reminders via email and phone as your insurance expiration date approaches, to the point of annoyance for some of our insureds, I’m afraid to say (sorry). We remind our insureds frequently to renew on time, if they intend to continue appraising or risk losing their prior acts. This is job one at OREP.
You can switch to another agent/ program and keep your prior acts as long as 1) you bind your new policy before the policy expiration date and 2) the new policy includes prior acts for free, like at OREP.
With insurance, if not in life, it’s best to over communicate (right?). Many of us renew our E&O without ever speaking to our agent. Many times, there is no reason to. At OREP, you submit a slot-rated application online and in five minutes you’re done for another year. Even if the application is not slot rated and requires some underwriting, if you answer all the questions completely, the next you hear from us is the quote. Frictionless as they say, but…
Here is another real-life scenario: an insured completed an application intending to get combination coverage for appraising and real estate sales. This is like two policies for the price of one—a money-saving option for OREP insureds. However, because they indicated no previous or estimated future sales revenue, they got no coverage for sales. This particular application (created by the carrier) has a glitch in my view, because it had no checkbox to clearly indicate a desire for sales coverage.
One of our agents caught the mistake at renewal. When I called the insured to follow up, they indicated they had wanted coverage for both appraising and sales, just in case they did one or two sales transactions during the year. They thought they had coverage for sales but a year later we realized they did not. They filled the sales revenue column with zeros and had failed to communicate their wishes to the agent. And, of course, the application was deficient because it lacked a clear “yes” or “no.” Luckily for our client, they had done no sales that year so there was nothing to worry about. We fixed the application. But this underlines why it’s a good idea to overcommunicate with any agent you transact with.
Reading Your Policy
The Exclusion Portion of the policy in question reads as follows: Services performed for others in the Insured’s capacity as a(n): Real estate agent or broker; Leasing agent or Property manager; Auctioneer of real property; Real estate consultant or counselor; Short term escrow agent, or referral agent.
So there it is in black and white. If the insured had read the “Exclusions” portion of the policy (what’s not covered) they would have realized right away that it wasn’t the coverage they wanted. Agents can ask the right questions; we can anticipate your needs, but we can’t read your mind.
This is not a complete list of everything to review in your policy of course. If your name/company name is wrong, or if your coverage amount (“Limit”) or deductible is not correct, that’s important too. Getting insurance at OREP can take as little as five minutes, so you have time! Review your policy when you get it, especially the Exclusions section, and verify your Retroactive Date at a minimum. If you have a special coverage request, let it be known up front. Thanks for reading and don’t forget that OREP provides its members with 14 hours of free risk management, approved continuing education (approved in 46 states. 18 hrs. of approved CE in Calif.). Click here to learn more.
>> Join the Discussion at OREP/Working RE’s Coronavirus (COVID-19) Discussion and Resource Page/a> where you can share your thoughts, experiences, advice and challenges with fellow appraisers.
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 firstname.lastname@example.org or (888) 347-5273. California Insurance License #0C89873. Visit OREP.org today for comprehensive coverage at competitive rates.
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