The Low Risk Valuation (LRV) Scheme Amendment to the APIV Professional Standards Scheme has been published in all state and territory governments and will come into full force in all jurisdictions from 7 January 2020.
Prior to this amendment, APIV members carrying out LRV work have been held to the same liability caps as higher risk valuation work and have been required to maintain higher professional indemnity insurance (PII) coverage solely based on the assessed value of properties.
What does this mean for APIV members?
From 7 January 2020:
- 7 categories of valuation are formally recognised and embedded within the APIV Professional Standards Scheme as being lower in risk for claims.
- If your PII policy renews on or after 7 January 2020, you will no longer need to include LRV work when you work out the ‘Upper End Value’ for your firm as part of your APIV membership renewal process.
- You will be able to benefit from the lowest cap of $1 million for any claim arising from a LRV, regardless of what the assessed value is for the subject property.
- If your PII policy renews on or after 7 January 2020, the minimum PII coverage required for Low Risk Valuation work will be $1 million (plus $500,000 to cover defence costs, if the policy limit of indemnity is cost-inclusive).
What does the regulator say about the LRV Scheme Amendment?
From Professional Standards Councils’ Annual Report 2018-19, at page 37:
The nature and significance of the amendment
The amendment introduced a type of work applying a risk-based methodology to determine the applicable monetary limit for those members who undertake valuations that have a low incidence of claims or have claims of a lower value, measured by reference to the valuation figure.
The amendment encourages members of Australian Property Institute Valuers Ltd to consider the risks inherent in their valuation work and use this to inform their professional indemnity insurance requirements.
The association advocated that the new monetary limit in the scheme would foster an increasing culture of risk management and awareness of risks by the members, which represents a significant advancement in the development of occupational standards and consumers’ protection.
Where do I find more information on the LRV Scheme Amendment?
To find out more about this innovative API initiative and what the 7 categories of LRV are, please click here.
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