Armenia drafts clearer rules for property appraisers’ mandatory liability insurance
Armenia’s Cadastre Committee has drafted amendments to the Law on Appraisal Activity and the Civil Code that set more detailed rules for mandatory professional liability insurance of property appraisers. The minimum annual insured amount stays at AMD 150 million (about $414,000) per appraiser or service provider.
The drafts have been published on the e-draft.am platform for public discussion until October 23. The current law only sets the obligation to insure and the minimum amount. The draft specifies that an appraisal firm must insure its liability to cover monetary damage caused to a client or beneficiary by a professional error, omission, or breach of professional requirements or valuation standards.
An insured event will require five conditions at once: an error or breach occurred during the appraisal, the property was undervalued or overvalued as a result, the client or beneficiary suffered actual monetary loss, there is a direct causal link between the breach and the loss, and the loss stems from an appraisal carried out during the policy period. A change in the property’s market value after the appraisal is not in itself an insured event unless it is shown to result from an error made at the time of the appraisal.
The unreliability of an appraised value will be confirmed by the professional commission, or by a court for reports outside the commission’s remit. The commission’s finding alone is not sufficient grounds for payment: the fact and amount of the loss and the causal link must be established by a final court ruling.
Termination of the insurance contract or of the appraisal firm’s activity will not cancel the right to file claims and receive compensation for appraisals made while they were in effect. The Civil Code amendment states that the policy also covers insured events arising after its expiry or early termination from reports approved during its term.
The limitation period for claims against the insurer will run from the day the injured party learned, or should have learned, of the loss and its link to a breach during the appraisal. Time spent in court proceedings against the appraisal firm over the same loss will not count toward the period, and if less than six months remain afterwards, the period is extended to six months.
Other requirements remain: as now, an appraisal firm must have an employment contract with at least one appraiser who does not work as an appraiser in a primary job with another employer, and must submit a valid insurance certificate when registering. The absence of mandatory insurance will be grounds for measures provided by law. The laws will take effect the day after official publication. According to the explanatory note, no change in state budget revenues is expected.
