As a real estate professional, your mission is to assist people with their property needs. From finding that ideal cul-de-sac home for young families on a cul-de-sac street to selling warehouse space to an expanding manufacturer, your work is valuable and can have lasting consequences in people’s lives. However, taking on these tasks comes with its own set of risks which could potentially lead to lawsuits with significant legal ramifications; to safeguard yourself against those risks while meeting obligations is E&O insurance.
Errors and Omissions Insurance, commonly referred to as E&O or real estate agent E&O coverage, is a form of professional liability coverage designed to safeguard real estate agents, brokers and franchise/firm owners against claims related to the performance of their duties. Therefore it is crucial for real estate professionals to become acquainted with what E&O can provide them and understand its basics as a form of defense against claims from claims related to performance of duties.
Real estate transactions can sometimes go wrong for various reasons. From understating square footage of properties to failing to inform clients about zoning laws properly, even the most meticulous agents may make a costly error that they later regret.
Although E&O insurance may not be required in all states for real estate professionals, it remains wise to carry it. E&O coverage offers protection from potential lawsuits and can even be required before entering contracts with certain lenders or brokerage firms. Furthermore, E&O policies cover any expenses incurred should an incident of breach of fiduciary duty, malpractice or negligence occur and cover associated legal expenses should a claim arise against you.
Some E&O policies specifically exclude certain transactions, such as those where one or more associates of your firm have ownership interests in the property being bought or sold. Therefore, it is imperative that you consult an experienced insurance broker and review your policy thoroughly prior to purchase.
E&O policies often include bodily injury coverage for real estate professionals. This coverage pays for injuries suffered at open houses or inspections by clients or guests as well as related medical costs and legal fees incurred as a result. Real estate professionals should carefully consider this form of coverage because it could save their business from severe losses.
While injuries in the real estate industry may be rare, they do occur. A husband could trip over a loose floorboard when inspecting an attic or someone could fall through an open house window and sustain serious injuries; such incidents could potentially lead to lawsuits if not properly insured against. It is therefore essential that real estate agents carry adequate coverage through insurance.