If you’re looking for a property insurance appraisal, you may have heard that a USPAP appraisal is a highly- trusted way of collecting property valuation data for your annual Statement of Values (SOV). But what is a “USPAP appraisal” and how is it different from a standard appraisal?
All About USPAP
USPAP stands for the “Uniform Standards of Professional Appraisal Practice” and, according to the Appraisal Foundation, it’s the “generally-recognized ethical and performance standards for the appraisal profession in the United States.” The focus of USPAP standards is about following ethics, building trust with clients, and communicating appraisal data most effectively and with the greatest transparency.
And USPAP has a long history; Congress adopted it in 1989, and since then, it’s served as the minimum standards for everything from real estate and personal property appraisal to business and mass appraisal. It’s so well-recognized that, for any federal real estate transactions, state licensed and certified USPAP appraisers are required to comply with these standards. For non-federal appraisals, however, compliance with USPAP standards is a choice and not a legal requirement, unless a specific client agreement requires it by law.
To become a state licensed or certified real property appraiser in the United States – that is, an appraiser of fixed property like land and buildings — the Appraiser Qualifications Board (AQB) developed specific qualifications criteria. This includes minimum education, experience and examination requirements. USPAP appraisers must also take a 15-hour National USPAP course (or its equivalent) and then, every two years, refresh their knowledge with the seven-hour National USPAP Update course (or its equivalent). This helps ensure USPAP standards are always top-of-mind with appraisers as their work is being completed, and that any new requirements can be included in the valuations.
But that doesn’t mean that all property appraisals are made equal and that every appraiser automatically adheres to USPAP standards when performing their valuations. So when writing your appraisal RFP for property insurance appraisal services, for the best results, make sure you specify that your appraisal services company performs a USPAP appraisal. This increases confidence that you’re getting a thorough examination of your property, and that the appraisers will gather all the data you’ll need for your insurance SOV. Credible, more thorough data translates to better insurance ratings. It lets you avoid worst-case-scenario insurance situations. And it can help you secure the right amount of insurance at the best price.
What Type of Information Does a USPAP Appraisal Cover?
USPAP addresses the ethical and performance obligations of appraisers through a collection of definitions, rules, standards, standards rules and — when relevant — additional statements.
The USPAP Definitions section is essentially a dictionary of USPAP terminology and how it should be applied to appraisals.
The USPAP Rules focus on the constraints for ethics, record-keeping, competency, the scope of work, and jurisdictional exceptions. These rules detail everything from requirements for retaining objectivity and impartiality during an appraisal, to how appraisal and appraisal review records should be kept. They encompass the expectations for the level, type of knowledge and experience appraisers should have before and during an appraisal. The rules discuss how much effort should go into scope of work-related issues like problem identification, research and analysis. And when USPAP standards conflict with law or public policy, the rules recommend how appraisers should handle the balance of the work.
The USPAP Standards lay out appraisal requirements, reviews, and how to best communicate that information. Through it, appraisers learn requirements for developing and communicating an appraisal review, a mass appraisal, a personal property appraisal and an intangible asset appraisal.
When Must an Appraiser Comply with USPAP Guidelines?
There are several situations where complying with USPAP guidelines becomes critical for a USPAP appraiser. They include:
- First and foremost, a USPAP appraiser always “must act competently and in a manner that is independent, impartial, and objective.”
- The appraiser must comply with USPAP Ethics, Competency, Record Keeping, Jurisdictional Exception, Scope of Work and Record Keeping rules, as well as any active Statements throughout the appraisal or appraisal review assignment.
- The USPAP appraiser must follow USPAP rules, standards and (when available) statements any time they’re providing opinions on the quality of another USPAP appraiser’s work.
- And the appraiser must comply with USPAP Ethics, Competency, and Jurisdictional Exceptions, Scope of Work, and Record Keeping rules, any applicable development and reporting Standards, and any active Statements, when the appraisal or appraisal review is a part of a larger initiative containing opinions, conclusions or recommendations.
All in all, USPAP guidelines are designed to keep appraisals ethical, unbiased, efficient and thorough. They help ensure that your appraiser must attend to all the critical details and not cut corners.
For example a USPAP appraisal means appraisers must measure every building they appraise —never relying on previous data from another vendor — in order to calculate an accurate square footage. This translates to stronger valuations and more accurate insurance coverage. It’s where taking a little extra time with the appraisal can make a big difference later.
Strong USPAP Standards Support the Property Appraisal Data that Makes a Difference
USPAP appraisals follow the definitions, rules, standards and statements that help ensure you get the most value from your services. You can gain the important property data you need to make more informed decisions and capture better insurance rates and ratings. Specify a USPAP appraisal in your next RFP to lock in the highest standards for your data collection.
And for more information on how Centurisk can support your property risk management program with a USPAP appraisal, contact us anytime.
Want to see how Centurisk’s USPAP-based property insurance valuation can help you mitigate risk? Contact us today.