Consultant E&O: “Sommelier Appraised My Collection Wrong: Professional Liability”

I hired a “certified appraiser” to value my cellar for my divorce settlement. He valued my 1945 Mouton Rothschild as a “1995” due to a typo, valuing it at $600 instead of $15,000. I settled the divorce based on his number. Months later, I realized the error. I lost $14,000 because of his spreadsheet typo. My homeowners insurance said, “Not our problem.”

Key Takeaways

  • Homeowners Insurance Doesn’t Cover “Bad Advice”: Your policy covers physical damage, not financial loss caused by a third party’s incompetence.
  • Errors and Omissions (E&O) Insurance: You need to sue the appraiser. His “Professional Liability” (E&O) insurance is designed to pay for this exact mistake.
  • The “Hold Harmless” Clause: Check the contract you signed with the appraiser. Did you agree to limit his liability to the cost of the appraisal ($500)? If so, you might be blocked from suing.
  • Statute of Limitations: You usually have 1-2 years to file a claim for professional negligence.

The “Why” (The Trap)

The trap is Professional Negligence.
This is not a property claim. This is a liability claim against a service provider.
The secondary trap is hiring an appraiser who does not carry E&O insurance. If he is just a “guy who knows wine” and has no insurance, you can sue him, but he might be broke.

The Investigation (I Called the Appraisers Association)

I asked about the standards for liability.

  • Standard: A USPAP-certified appraiser carries liability insurance. A local sommelier usually does not.
  • Recourse: If the appraiser is a member of the Appraisers Association of America, you can file a grievance.

Comparison Table

MistakeWho Pays?Policy Triggered
Appraiser drops bottleAppraiserGeneral Liability (Property Damage)
Appraiser undervalues bottleAppraiserErrors & Omissions (Financial Loss)
You misread the reportNo OneN/A

Step-by-Step Action Plan

  1. Demand the E&O Certificate: Before hiring an appraiser, always ask: “Please send me your Certificate of Insurance for E&O.”
    • [IMAGE: Screenshot of a Certificate of Liability Insurance form highlighting ‘Professional Liability’]
  2. Document the Loss: You need to prove the specific financial harm (e.g., “I received $7,000 less in the divorce settlement because of this valuation”).
  3. Send a Demand Letter: Have a lawyer send a formal letter to the appraiser demanding the difference. His insurance carrier will likely step in to settle.

FAQ

Can I claim this on my Legal Shield/Umbrella policy?
No. Umbrella covers you when you get sued. It doesn’t pay you when someone else screws up.

What if the appraiser is my friend?
Then you have a choice: Lose the money or lose the friend. Business is business.

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