Errors and Omissions Insurance for real estate brokers is a type of professional liability coverage designed to cover legal costs should a client file suit alleging negligence in service delivery. Errors & Omissions insurance is commonly offered across many professions such as real estate, finance & investments, legal, accounting & IT to protect against unexpected risks.
Even though a single claim will likely not put your business out of commission, it can have serious repercussions for both reputation and finances if mistakes arise in a fast-paced industry where client transactions involve emotions involved with transactions. Therefore, purchasing E&O insurance for real estate brokers should be one of your key business decisions.
E&O Insurance Is Necessary
Most states mandate errors and omissions insurance for licensed real estate professionals, yet even in states without this mandate it remains wise to purchase such coverage in order to safeguard both your personal assets and livelihood. Aside from providing protection from legal challenges it also safeguards professional integrity, enhances client trust, and enhances professional standing.
Real estate is a highly technical field with numerous avenues for liability claims to arise from not fulfilling professional responsibilities. From failing to mention structural flaws in homes to mishandling closing documents, there could be any number of scenarios in which claims could be filed against your services by clients – claims often caused by unintentional mistakes that can easily be avoided through diligence and attention to detail.
Your E&O policy as a real estate broker will vary depending on which insurer you go with, but typically a standard policy will cover legal expenses and any judgment awarded to claimants in case there is ever any action brought against your actions. Therefore it’s wise to consult an experienced insurance broker about selecting coverage tailored specifically to your real estate business needs.
Experienced brokers are adept at providing E&O coverage for real estate brokers as well as helping select other forms of coverage, such as general liability, workers’ compensation or property coverage. Furthermore, they may advise on best practices for your brokerage that may reduce the likelihood of claims being brought against it.
NAR offers its members several resources that can help them understand and mitigate risks, including accessing over 400 risk advisory materials and case studies through its Library. Furthermore, Victor Insurance, NAR’s provider of E&O Insurance has produced a tri-fold brochure designed to educate salespeople on E&O insurance issues; you can view this by clicking here or reaching out directly to your agent or broker who represents you; in most cases a broker will have group E&O policies covering them all while independent associates need individual policies for themselves.