I recently discovered some interesting information regarding errors and omission insurance for employees. I am hoping that by sharing this information, I will be saving some of you time and money regarding the subject.
I currently have a licensed appraiser who works for my company. As his employer, I have agreed to obtain and pay for his E&O insurance. Now, I have a couple of different options when it comes to adding an employee to my insurance policy. I can either add him as a standard employee or an independent contractor. Now, how I add him to the policy does not necessarily have to reflect how he is compensated, it is solely dependent on what plan I think is best.
It is typically less expensive to sign an employee on as a standard employee but listing them as an independent contractor can protect me if they ever mess up and are sued. In the past, I would sign my appraisers on as independent contractors because it was worth it to me to pay a little more if it meant protecting myself. However, I recently learned that it is very rare that anyone ever just sues the appraiser that messed up, they typically also sue the company they work for.
Additionally, oftentimes questionnaires regarding E&O insurance ask if you or anyone in your company has ever been sued. As a result, I no longer pay extra for my appraisers to be signed on as independent contractors. It is very rare that this extra precaution would actually protect me if something were to happen.
This all being said, I am no expert in this field. I would further look into your options concerning the safest and most cost-effective way of setting up E&O insurance for your appraiser employees.
For more information on this subject, please download and listen to The Appraiser Coach Podcast Episode: 271 Errors and Omission for Appraisal Employees