Real estate brokers and agents are charged with providing detailed information to prospective homebuyers while managing complex property sales, rental agreements, purchases and mortgage transactions. Their work can be complex and nerve-wracking – errors and omissions insurance (E&O) offers professional liability coverage to protect against mistakes that result from mistakes such as negligence or failure to deliver professional obligations; it often comes bundled together with general liability or professional indemnity coverage.
What Does Errors and Omissions Insurance for Real Estate Brokers Include? In most cases, broad-form Errors and Omissions (E&O) coverage for real estate brokers typically covers legal fees, court costs and related expenses in the event a client files suit against you over mistakes made during real estate transactions – this may range from failing to disclose information relevant to buyers to not filing legal paperwork on time.
Errors and omissions coverage provides real estate professionals with an extra measure of protection against allegations that they breached a contract or made fraudulent promises to clients, such as misrepresentations, breach of fiduciary duty and failing to abide by local, state and federal law.
Although errors are unavoidable, you can reduce some of the risk factors by providing your staff with proper education and training. Trained employees are less likely to make errors that could have costly financial repercussions and can help mitigate potential claims or lawsuits against your organization. Implementing policies and procedures designed to minimize risk will help secure you a lower premium rate with E&O insurers.
Real Estate Errors and Omissions Insurance Costs
The costs associated with E&O insurance depend upon a range of factors including its scope, transactions handled on average each year, claims history of your brokerage and policy specifics such as deductible amounts; generally speaking, higher transaction volumes with good claims history tend to qualify you for lower premium rates than low volume with poor claims histories.
Though not every business requires E&O insurance, many industries do. Therefore, it’s essential that you review your policy to make sure that it covers everything necessary for your industry and company. Furthermore, consider tailoring it more cost effectively with industry specific risks in mind.