Errors and omissions are inevitable in the real estate business. Errors become even more likely when dealing with large transactions, emotionally charged clients, or complex property matters. Should one of your clients allege professional negligence on your part, an E&O policy can cover legal costs and damages sustained as a result.
Real estate agents and brokers need errors & omissions insurance (E&O) protection against potential financial claims arising from errors or omissions in their work. While mistakes are inevitable, risks can be reduced by adhering to high professional standards and adopting best practices.
Real estate E&O insurance premiums depend on many individual factors specific to each insured. Beyond deductible amounts, these include company size and type, history with insurers, individual risk assessment and more experience and no claims records leading to lower premium rates; some carriers even provide discounts for businesses with high transaction volumes or a history of E&O claims.
NEXT Insurance provides real estate professionals with an e&o policy they can easily purchase online, quickly getting a quote instantly and accessing your certificate of insurance to show clients. Most policies cost between $25 and $75 monthly depending on how often it needs to be renewed.
Hiscox is an established commercial insurer offering professional liability coverage to real estate professionals. Their policies are specifically tailored to this industry and customer service is second to none – including 24/7 claims reporting capabilities as well as connecting their customers with risk management experts.
Cost of E&O Insurance Policies in Real Estate Varies by Business: Real estate businesses typically face higher risk exposure and therefore higher insurance costs; some industries also may require this coverage as per legislation or client demand.
As a rule of thumb, real estate agencies should plan on spending at least several thousand dollars per year for an E&O policy. While this might sound expensive at first, consider that litigation defense costs much more than paying the claim itself.
Your E&O policy may also cover expenses related to the repair or replacement of damaged property if it is found you were responsible. In some instances, travel costs associated with court appearances or arbitration sessions might also be covered – check your policy for more details of expenses covered by it.
Many states mandate real estate agents and brokers carry errors and omissions insurance in order to protect homebuyers and sellers from unethical business practices. If your state does not require this coverage, however, you should strongly consider purchasing one anyway in case a dispute arises between parties involved in real estate transaction. Review your policy periodically in order to stay aware of changes to coverage or premium rates as well as what your e&o coverage doesn’t include.