FDIC Exclusions in Appraiser E&O Policies
Many appraisers don’t know about or don’t understand the new FDIC and “regulatory agency” exclusions found in many appraiser E&O policies. Why is it relevant to know if your policy has an FDIC or regulatory agency exclusion of some sort? The main reason is because the FDIC sues appraisers for professional negligence — such lawsuits are discussed in prior posts: here and here.
How do you determine if a policy being offered to you contains an FDIC exclusion? First, no policy sold by LIA in its appraiser E&O program contains any FDIC or similar regulatory agency exclusion. If you are not purchasing E&O insurance in LIA’s program, what you need to look for are the common exclusions shown below. When they apply to a policy, these exclusions are usually added as endorsements, typically at the end of an appraiser’s policy.
Navigators Insurance Company
The following exclusion is applied as an endorsement to many appraiser E&O policies issued by Navigators in states where appraisers are at higher risk for being sued by the FDIC. The effect of the endorsement is to exclude coverage for damages in any claim by the FDIC or by any similar federal or state regulatory agency and to cap the attorneys’ fees available to defend such a claim.
Great American Insurance Group.
Great American may soon offer a new appraiser E&O program. Great American may apply the following FDIC exclusion endorsement to appraiser E&O policies — it’s not known at this time whether the endorsement will actually be applied to policies that it may sell to appraisers:
The following exclusion is added in an endorsement to many appraisers E&O policies from General Star:
The exclusion below is found within the main policy text of many Five Star/Lloyd’s appraiser E&O policies:
The exclusion below is contained in endorsements to some E&O policies from CNA: