Any profession involving large sums of money, complex legal processes and external parties involves risk, as mistakes may happen. Miscalculations or oversights could cost businesses dearly and may lead to lawsuits against them; especially for architects, contractors or real estate firms with errors and omissions insurance (E&O). It should be one of their top commercial policies.

E&O (also called professional liability insurance) protects businesses against financial loss caused by errors or omissions by covering legal fees to defend against claims by clients. It’s an essential policy for professionals in various fields and may even be mandated by law or professional associations; additionally, E&O insurance helps maintain your reputation even if a claim against your services cannot be proven.

Say, for instance, you recommend to a client that they sell their home for too little; should the client then sue and claim damages against your firm, you could find yourself facing a lawsuit that threatens to devastate its assets and threaten to drive you from business altogether unless protected with E&O insurance.

Real estate E&O policies cover you for mistakes that cause financial loss to clients as well as penalties or fines that result from those errors, claims made against you by third parties for breaches in confidentiality or data protection, and often even offer special “giveback” provisions when certain risk management procedures are put into effect – which means reduced premiums for agent-owned transactions when these procedures are in place.

Cost of E&O insurance for real estate brokerages varies based on a personalized risk analysis and number of transactions you expect to handle in a year. Lower premiums can be achieved with a clean claim history and greater experience; increasing your deductible also may lower premiums.

Your best option for learning the cost of real estate E&O policies is speaking with an insurance broker who will conduct a risk analysis and offer quotes from top insurers.

Real estate E&O policies typically feature a $500 deductible or less, with costs dependent on coverage levels chosen and length of policy duration. In order to continue your policy when leaving an employer or moving states, a tail policy that provides transition coverage may be required. Costly as this may be, investing in risk mitigation can save potentially devastating consequences from errors in judgment. Furthermore, it demonstrates to customers and other real estate professionals in your area that your business takes its work seriously; after all, they want to work with a company who respects both itself and their reputation equally. Likewise, this also sends a powerful signal about its commitment to doing it right!