As much as we all complain about the rising cost of insurance, one thing is certain: we sure are glad to have it in place when we need it! While there is no hard evidence supporting the belief held by some that carrying E&O makes you a target, there are plenty of cases of appraisers and inspectors being sued - who don’t have it. (And you think you have trouble sleeping at night.)
“I think the notion that having E&O insurance will cause someone to sue you is absurd,” said appraiser Jo Anne Glantz. “It is very expensive and time consuming to sue, and in our field, there is simply not enough money involved to encourage people to bring frivolous lawsuits about appraisals. On the other hand, I believe that if we are in this business long enough there is a chance that some (**!!!!**) will sue. It is simply the odds of doing volume. If that day comes you have no protection at all without insurance. We are professionals, we should protect ourselves like professionals.”
Doing the Numbers
According to appraiser Doug Smith, IFAS the arithmetic is simple. Smith is
being sued for not reporting in a FHA appraisal that the insulation in a home
was vermiculite that turned out to have asbestos. The case is headed for trial.
The estimated cost to defend is $28,000.
“I can assure you that it mattered little whether I had insurance or not. This is a routine, everyday case but according to my attorney, even the simplest cases can wind up costing at least $28,000 to defend. If insurance costs $1,000 per year and you have only one case in all the years you are practicing, E&O insurance will pay for itself. When you look at the cost of defense, you can easily see why so many cases are settled quickly, even though the appraiser may be in the right.”