E & O insurance for real estate agents is a type of professional liability coverage designed to safeguard brokers, owners, and associates from claims resulting from negligence, errors, or omissions committed during business operations. Policies typically cover legal fees, court costs, settlements incurred as the result of legal actions filed against their business and lawyer fees associated with legal claims made against it.
Real estate agents and brokerages in many states must comply with licensing requirements by carrying this type of coverage to meet licensing obligations and meet client demands for transactions to go forward successfully. Furthermore, having this protection helps reduce risk associated with mistakes that might cost a substantial sum due to an error or oversight on part of an agent or brokerage. For this reason it is vitally important that this type of protection exists so as to lessen potential financial disaster.
Real estate E & O insurance policies provide businesses in the industry with various coverage types and limits, each offering different benefits and limits that should be carefully researched to select one best suited to your business. In general, premiums for this form of coverage tend to be relatively reasonable – often costing less than several hundred dollars annually in some instances – providing peace of mind in case anything unexpected should arise during conducting your business activities.
Although mistakes made by real estate agents that lead to lawsuits may seem rare, they do happen more frequently than you’d think. More serious errors might include failing to disclose structural flaws in a property before hosting an open house; should this occur, clients could file claims of misrepresentation against you and legal expenses coverage can help cover those associated with such an action should one arise.
Real estate e & o insurance doesn’t cover every misstep made when selling real estate; some mistakes are specifically excluded from coverage. A common exclusion is for claims related to dishonest agents if their lies directly affect real estate sales; any damages arising due to pollution on a property will also not be covered due to health and safety laws requiring disclosure for potential buyers.
One common exclusion found in this type of insurance is coverage incurred due to any violation of state and federal laws. This may include tax regulations, zoning ordinances, or environmental issues; so it’s essential for real estate agents and brokers to remain up-to-date with all pertinent state and federal regulations.