Professional Indemnity Insurance for Property Valuers

Why do property valuers need Professional Indemnity Insurance cover?

Property valuers provide advice that directly affects the financial fortunes of their clients, so professional indemnity insurance is something they really can’t afford to be without.

If they provide a valuation that is erroneous, their clients stand to lose substantial amounts of money and will be highly likely to sue the valuer to regain their losses.

Property valuers provide valuations for a wide range of purposes and in the course of doing so, they are exposed to a variety of risks. Key exposures include claims due to:

  • unfavourable economic conditions
  • unclear instructions or communications
  • inadequate analysis of property
  • inappropriate valuation methodology
  • conflict of interest
  • breach of contract
  • inadequate assessment of comparable sales
  • undertaking higher risk valuations.

The most common claims brought against property valuers are for breach of contract, negligence and misleading and deceptive conduct under Section 42 of the Fair Trading Act or Section 52 of the Trade Practices Act.

A valuer who is an employee of a valuation company can also be sued in certain circumstances, such as for negligence where their employer is insolvent or for deceptive and misleading conduct. For this reason, employed valuers would be wise to ensure that their employer includes them in their professional indemnity insurance and that they are indemnified in writing in their contract of employment.

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What does Professional Indemnity Insurance cover?

Professional indemnity insurance protects individuals and businesses who provide advice or services from alleged claims negligence or breach of duty. It provides cover for legal costs in defending such a claim and also any damages awarded to the claimant.

Common liabilities covered by professional indemnity insurance include:

  • Breach of duty. Including breaches of confidentiality, privacy and fiduciary duty.
  • Violation of statutory duty. Claims made for violations of consumer protection laws.
  • Contractual liability. Claims that a contractual agreement has been breached.
  • Breach of fair trading laws. Claims for breach of the Competition and Consumer Act and Fair Trading Act.
  • Infringement of intellectual property. Unintentional breaches of copyright, trademarks and patents.
  • Defamation, libel and slander. Unintentional publication of defamatory material.
  • Contractors or consultants. Liability resulting from services provided by contractors or consultants.
  • Loss of documents. Claims resulting from loss or damage of a client’s documents.
  • Misleading and deceptive conduct. Claims of misleading and deceptive conduct during the provision of a service.
  • Court appearance. Compensation equal to the insured’s daily salary, if required to appear in court.
  • Claims investigations costs. Compensation for costs associated with investigating claims.
  • Employee dishonesty. Claims arising from dishonest, fraudulent, criminal or malicious acts or omissions by employees.
  • Inquiry costs. Compensation for costs associated with inquiries into the insured’s liability.
  • Public relations expenses. This benefit provides cover for any adverse public relations expenses that arise during the insured period.

It should be noted that professional indemnity insurance does not usually cover liabilities that are recognised under criminal law.

Find out more about Professional Indemnity Insurance

Why do property valuers need Professional Indemnity Insurance cover?

Property valuers provide advice that directly affects the financial fortunes of their clients, so professional indemnity insurance is something they really can’t afford to be without.

If they provide a valuation that is erroneous, their clients stand to lose substantial amounts of money and will be highly likely to sue the valuer to regain their losses.

Property valuers provide valuations for a wide range of purposes and in the course of doing so, they are exposed to a variety of risks. Key exposures include claims due to:

  • unfavourable economic conditions
  • unclear instructions or communications
  • inadequate analysis of property
  • inappropriate valuation methodology
  • conflict of interest
  • breach of contract
  • inadequate assessment of comparable sales
  • undertaking higher risk valuations.

The most common claims brought against property valuers are for breach of contract, negligence and misleading and deceptive conduct under Section 42 of the Fair Trading Act or Section 52 of the Trade Practices Act.

A valuer who is an employee of a valuation company can also be sued in certain circumstances, such as for negligence where their employer is insolvent or for deceptive and misleading conduct. For this reason, employed valuers would be wise to ensure that their employer includes them in their professional indemnity insurance and that they are indemnified in writing in their contract of employment.

Find out more about Professional Indemnity Insurance

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How to compare Professional Indemnity Insurance for property valuers

There are many professional indemnity insurance policies and each of them is different, so when comparing policies, it is important to look carefully at what each one provides. Questions to ask yourself include:

  • Is the policy industry-specific (i.e. is it designed to cover the typical risks faced by property valuers)?
  • Does the insurer specialise in your industry and understand the nuanced exposures property valuers face?
  • What are the exclusions in the policy? This is a particularly important section and should be read and understood thoroughly, as the exclusions describe what the policy will not cover and represent the main differences between policies.
  • How much is the excess? This is the amount you will have to pay upfront when making a claim.
  • What level of support does the insurer provide? When making a claim, will you receive professional advice and will your claim be managed by a dedicated claims team?
  • If this is your first professional indemnity insurance policy, does it cover work you have done previously and if so, how far back does the cover extend?
  • If you have more than one claim in a year, how many reinstatements of the insured amount are included in the cover?
  • Is the policy coverage worldwide, or does it only apply in Australia?

If you are in any doubt about whether the policy you are considering provides adequate cover, you should seek professional advice before committing yourself in writing.

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Public liability cover for property valuers

A property valuation firm is just like any other business, in that, because it interacts with the public, it needs public liability insurance. This covers liability for personal injury to third parties or damage to third party property.

Property valuers spend a good deal of their time away from the office, interacting with clients and visiting properties in the course of their work. If they were to damage a property whilst viewing it, or injure a third party through some action or inaction, they could be liable for a claim to be brought against them. Similarly, if clients visit them at their premises, they can be held accountable for any accident or injury that occurs on their premises.

Public liability insurance covers your business, any subsidiary companies you own and your employees and is often taken out at the same time as professional indemnity insurance or included in a package by the insurer.

The main exclusions found in public liability policies are the risks or ‘perils’ that would normally be covered by more specific insurances. Particularly hazardous activities and criminal actions by the insured are also not generally covered.

Although not compulsory, public liability insurance is recommended for any business that interacts with the public, including property valuers, as accidents do happen and could be devastating for a business that doesn’t have cover.

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Frequently asked questions about Professional Indemnity Insurance

Q. Who is a professional?

  • A. Any person who gives advice or provides a service in a professional capacity and in accordance with an established discipline.

Q. What does professional indemnity insurance protect me from?

  • A. Professional indemnity insurance protects your assets if a claim of negligence is brought against you.

Q. I am a competent valuer. Why do I need professional indemnity insurance?

  • A. Just in case. Even if you are not at fault your legal defence can be prohibitively expensive.

Q. How is a Professional Indemnity premium calculated?

  • A. Factors that influence the amount of your premium include the type of industry you are in, the services you provide, the amount of the Limit of Liability you opt for, your estimated annual gross income, your claims history and the amount of excess that applies to the policy.

Q. What is the Limit of Liability?

  • A. The Limit of Liability is the aggregate limit that applies to all claims made against you during the period of insurance and it will operate on either a costs-exclusive or costs-inclusive basis. Costs-exclusive is the preferred option for the insured, as it means legal defence costs are not included and thus do not reduce the limit.

Q. Apart from myself, who else is covered under a Professional Indemnity policy?

  • A. The principals, directors and partners in your business and also your employees.

Q. What is Civil Liability Indemnity?

  • A. Civil Liability Indemnity protects you from claims that arise from strict liability where there is no negligence involved.

Q. What is run-off cover?

  • A. It protects you from claims that are related to your business activities in a previous practice.

Q. What is the retroactive date?

  • A. The retroactive date is the date from which you are covered by your professional indemnity insurance policy.

Q. What is a known circumstance?

  • A. A circumstance where the insured was aware, or should have been aware, that an action or omission was likely to result in a claim, before that claim was made.
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Apply for Professional Indemnity Insurance for Property Valuers

As can be seen, property valuers are exposed to a wide variety of risks in the course of their work and one slip up could result in a lawsuit that could have catastrophic consequences for their business. That’s why, just as any person who provides advice that has significant financial implications, property valuers need professional indemnity insurance as a matter of course.

Get a Professional Indemnity Insurance for Property Valuers

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2 Responses to Professional Indemnity Insurance for Property Valuers

  1. Default Gravatar
    Brett | October 13, 2014

    Suppose I decided to start my own business after being a property valuer for over 13 years, and that business was to concentrate wholly on desktop valuations. What would the likely cost of PI insurance be? Would desktop valuations represent a greater or lesser risk in the eyes of an insurer?

    • Staff
      Richard | October 14, 2014

      Hi Brett,

      Thanks for your question. Unfortunately, finder.com.au is a comparison website and as such is unable to provide its users with that kind of information. However, if you fill out the enquiry form on the page above, a broker will be in contact to help you find the right policy.

      I hope this was helpful,
      Richard

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