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Insurance IQ: Defining Professional Services
by Isaac Peck, Editor
Have you ever wondered what your E&O policy actually covers?
OREP E&O insurance agents frequently get questions from appraisers such as: “Am I covered for right-of-way appraisals?” Or “Am I covered for hybrid appraisals?” Or “Am I covered for appraisal review work?” If you’re covered through OREP and you’re a licensed real estate appraiser performing “professional services” as a real estate appraiser, the answer to the above coverage questions is most likely yes.
OREP policies are tailored specifically for real estate appraisers, providing coverage for “Professional Services” that you might provide as a real estate appraiser. Defining coverage in this way is commonplace for most (if not all) professional liability policies, also known as errors and omissions insurance (E&O).
It follows then that “professionals” should purchase professional liability (E&O) insurance specific to the services they provide. The good news for OREP appraisers is that you have broad coverage for a variety of services, assignments, and appraisal specializations that you might pursue. Most policies in the marketplace are broad, but please ask your agent if you have any questions—whether you are with OREP or not.
Here is an example of how “Professional Services” is defined in OREP’s individual appraiser policy: “Professional Services means services performed for others by the Named Insured in the capacity as a properly licensed or certified appraiser of real estate, notary public, expert witness, or a member of a real estate accreditation, standards review or similar real estate board or committee.”
You will find that most services you provide in your capacity as a Licensed/ Certified appraiser of real estate should be included in your coverage, unless it is specifically excluded in the policy. If you’re thinking, well then what’s excluded is pretty important: you’re right. And what’s not excluded is important too because that’s what’s covered!
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For example, at OREP, there is no exclusion for right-of-way appraisals, commercial appraisals, appraisal reviews, hybrid appraisals, property data collection, appraisal-related consulting, or expert witness work. That means that that work should be covered (check with your OREP agent). It’s important that you ask your agent if the coverage is there for the types of appraising you do. To summarize, you want a policy that affords broad coverage for a variety of services you might perform in your capacity as a licensed real estate appraiser, and that does not specifically exclude what you want covered.
Coverage for Other Work
So far we’ve confined our discussion specifically to real estate appraising and the related services you might provide in your professional capacity as such, but what about other services you provide, like real estate sales? Well, there’s good news here too.
Some appraisers also work as a real estate agent/broker, or property manager, etc. There is a solution for you: combination coverage. This is one policy that covers professional services for both appraising and sales/brokering. And one (similarly priced) premium instead of two.
Here is the definition of “Professional Services” in OREP’s Standard Program: “Professional Services means services performed for others in the Insured’s capacity as a(n):
1. Real estate agent or broker;
2. Leasing agent or Property Manager;
3. Appraiser or auctioneer of real property;
4. Real estate consultant or counselor;
5. Short Term Escrow Agent or notary public;
6. Member of a real estate accreditation, standards review or similar real estate board or committee; or
7. Expert witness, provided that all necessary licenses or certifications are held by the Insured at the time of the act or omission giving rise to the claim. Professional Services shall also include services performed for others by the Insured on or via the Insured’s internet, e-mail, telecommunications or similar system. Professional Services does not include services as a Construction Manager, Business Broker, Mortgage Broker, or Mortgage Banker.”
If you are managing property, or hold a real estate sales or broker license, we recommend asking your agent about combination coverage to make sure you have the best policy fit for you. It will save you money and provide the coverage you need.
The takeaway is that it’s in your best interests to be covered under a policy that specializes in the professional services you perform. OREP has two different real estate appraiser policies with slightly different coverages, so it’s important to check with your OREP agent to make sure you have the coverage you need. OREP has expanded hours (8 a.m. – 8 p.m. EST) so that when you need us, we answer the phone. And if you don’t need the extra care, we are fully automated online for quick and seamless coverage. Call OREP today at 888-347-5273 to see what you’re missing.
About the Author
Isaac Peck is the Editor of Working RE magazine and the President of OREP, a leading provider of E&O insurance for real estate professionals. OREP serves over 10,000 appraisers with comprehensive E&O coverage, competitive rates, and 14 hours of free CE for OREP Members (CE not approved in IL, MN, GA). Visit https://OREP.org to learn more. Reach Isaac at firstname.lastname@example.org or (888) 347-5273. CA License #4116465.
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