Appraisers provide valuation services for both real and personal property. These valuations may be used for tax or other financial statements, loss adjustment, claim or insurance purposes, home or commercial building purchases, or as a result of legal action. Some offer their services to the general public, while others are trade- or industry-specific, such as insurance claims adjusting.
Here are 8 risks and exposures that property appraisers may not be aware of:
Property exposure is generally limited to that of an office, although there may be some incidental storage or an area for meetings. Hazards arise from the considerable storage of property valuation documentation, diagrams, photos and similar records, although these are now often digital instead of paper format. Fire sources include wiring, wear, and overheating of equipment.
Crime exposure is from employee dishonesty and various types of fraud to both carriers and clients. The exposure can be quite serious as appraisers have access to individual customer’s proprietary information. Hazards increase without proper background checks and monitoring procedures.
Inland marine exposure is from accounts receivable, computers, special floaters, and valuable papers and records. Appraisers do field work which requires a variety of specialty equipment to do their evaluations. The sensitivity of the equipment will vary and must be handled with the appropriate degree of care. The customers’ papers on file may be originals that are difficult to re-create. A morale hazard may be indicated if the insured does not keep valuable papers and disks in fireproof file cabinets to protect them from smoke, water and fire. Power failure and power surges are potentially severe hazards. Duplicates should be kept off site to allow for re-creation.
Occupiers’ Liability exposure is often very limited as most of the client contact is over the phone, electronic, or by mail. Appraisers may spend a lot of time off site at loss sites or at clients’ premises. There must be procedures for appropriate behaviour, and complaints about appraisers should be dealt with quickly.
Professional liability exposures arise from the accuracy of the appraiser’s analysis of the valuation information. If done in conjunction with a loss, claims settlements can involve millions of dollars. Independent insurance appraisers may have legal responsibilities to both the insurer and the insurer’s policyholder, and are sometimes party to sensitive negotiations. Real estate appraisers’ calculations may have a significant impact on the salability and purchase price of a property. All employees must undergo thorough background checks including education and employment history.
Automobile exposures will vary. The primary risk is from hired and non-owned vehicles, but appraisers may use rental cars when sites to be valued are not local. If company vehicles are supplied for use, there should be clear procedures in place regarding personal use by employees and their family members. The age, training, experience, and records of each driver, as well as age, condition, and maintenance of the vehicles, are all important items to consider.
Workers compensation exposure is based on the type of items being appraised. If most of the work is done in the office, ergonomic concerns include eyestrain, neck strain, carpal tunnel syndrome, and similar cumulative trauma injuries that can be addressed through ergonomically designed workstations. Exposures increase with offsite work as the appraiser may work in damaged buildings or under other compromised conditions. Protective gear must be provided in certain circumstances.
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Assessing your exposures and taking the appropriate precautions can go a long way toward protecting your business.
Download our “Risk Summary - Real Estate Offices” guide for an in-depth list of more ways to minimize gaps in your risk management:
