API Valuation Protocol State of Emergency: Woodina Underwriting
Clarity for our members with Woodina PI Insurance
The API wishes to clarify a couple of matters for our members with Woodina PI Insurance, with respect to the Policy Endorsement set out below, which has been provided to us by Michael Wood. We would like to extend our appreciation to Michael for his work with us to achieve this endorsement quickly in the current climate.
- Woodina Insureds must obtain agreement by their Client/Instructing Party, as set out in Section 1 of the Endorsement, before preparing the report on the basis of the Crisis Protocols.
- The term “OR” in the Policy Endorsement may be causing confusion. The preamble sets out that it is an exclusion of cover, if either is not done. The Endorsement requires BOTH 1 and 2 to be completed to ensure PI cover. Where BOTH are not completed, the valuation will be excluded from cover.
COVID-19 POLICY ENDORSEMENT
We shall not be liable under this Policy to provide indemnity to any Insured in respect of any Claim arising from a valuation conducted by the Insured pursuant to:
- Australian Property Institute (API) Crisis and/or State of Emergency document dated 29 March 2020
- Australia Property Institute Valuation Protocol – Significant Valuation Uncertainty dated 29 March 2020; and
- Addendum – Special Instructions Residential Valuation Standing Instructions dated 30 March 2020
Where the Insured DID NOT:
- Prior to undertaking the Valuation pursuant to the Valuation Protocol suite of applicable documentation, receive the written agreement of the client that the client;
- is aware of the extent and limitations of a report undertaken by the Insured under the Valuation protocol (a copy of which has been provided to the client); and
- agrees that as the Insured is not able to conduct a full physical or personal inspection of the property, the Insured is entitled to use the other available means under the API Valuation Protocol, as agreed by the client, to assess the property; and
- agrees to accept the valuation report having regard to the risks inherent in relying upon a valuation which does not have the benefit of a full physical or personal inspection of the property; and
- agrees that it will not convey a Report prepared under this Crisis Protocol or any part of it to the any Third Parties (other than Reliant Parties for eg. LMI’s and Regulatory Authorities in accordance with their own reporting regime or as required by the ABA Banking Code) and will only use and rely upon it for the purposes in which it was instructed.
- Include in the valuation report the following clauses;
Market Uncertainty (as recommended by the API)
The outbreak of the Novel Coronavirus (COVID-19) was declared as a ‘Global Pandemic’ by the World Health Organisation on 11 March 2020.
We have seen global financial markets and travel restrictions and recommendations being implemented by many countries, including Australia.
The real estate market is being impacted by the uncertainty that the COVID-19 outbreak has caused. Market conditions are changing daily at present. As at the date of valuation we consider that there is a significant market uncertainty.
This valuation is current at the date of valuation only. The value assessed herein may change significantly and unexpectedly over a relatively short period of time (including as a result of factors that the Valuer could not reasonably have been aware of as at the date of valuation).
We do not accept responsibility or liability for any losses arising from such subsequent changes in value.
Given the valuation uncertainty noted, we recommend that the user(s) of this report review this valuation periodically.
Given that this report has been prepared without a full physical or personal inspection of the property, we recommend that the Client considers having us conduct a full inspection of the property when it is deemed appropriate to do so, in order to consider any impact that has on our valuation.”
We understand that many firms have received agreement by their banking Clients/Instructing Parties that, where a valuation is carried out by a member, who has confirmed PI cover applies in accordance with the suite of documents during the declared State of Emergency, THEN agreement to those terms contained in the Crisis Protocols, including within Section 1 of the Woodina Endorsement, is granted.
The API has consulted with a number of Banks who confirm that this is their approach and that they have provided these agreements to member firms.
We remain here to support you to further seek agreement, understanding the details of the protocols more clearly. We are very happy to run an information and Q&A session with your clients and instructing parties in need. Please keep us abreast of any issues that emerge as we roll out these protocols in implementation and we will provide support to resolve what we don’t know we didn’t know.
Amelia Hodge, CEO, Australian Property Institute
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