As a real estate agent, you are involved with enormous financial transactions every day. Your work involves people spending their life savings or investing in commercial property through you; in effect, it involves your guiding them through this complex process and helping to guide them successfully through it all. While mistakes do happen and could have dire repercussions for all involved parties involved. Having E&O coverage protects against potential costly lawsuits or settlements while helping maintain both reputation and career continuity.
No matter your experience in real estate, errors and omissions can happen at any time – whether you’re just beginning or are an established agent – and even small mistakes can have far-reaching effects. From misstating a property’s zoning to failing to communicate a lien properly with buyers, mistakes aren’t just costly; they could quickly derail your career as well.
Errors & Omissions coverage for real estate agents is an integral component of their career, yet finding one can often prove challenging due to various policies being available and various terms, deductibles and insurance limits to consider.
Brokerage-owned Errors & Omissions insurance is one of the most commonly utilized types of E&O coverage for real estate professionals, as it covers multiple licensed individuals working together within one firm. However, such policies don’t always offer sufficient coverage for freelance or independent contractor work as many brokerage-owned policies exclude such activities; those working as freelancers or in smaller firms should consider getting their own individual E&O policy instead.
Individual real estate agent E&O policies tend to offer greater coverage than broker-owned E&O policies, as well as additional endorsements that expand protection further – for instance a crime rider could provide extra insurance against identity theft and forgery that might threaten their career.
There are also policies specifically tailored for larger real estate firms or franchises, covering all of their licensed individuals under one policy. These “firm” errors & omissions policies are especially popular in states and markets where E&O policies are mandatory – while they tend to be less costly than individual agent E&O policies while offering high limits of liability coverage.
One potential drawback to firm E&O policies is that their limits are shared among all licensees within that firm, creating potential issues if the limit is reached as any unpaid claims must come out of funds from all licensees in that firm. To mitigate this situation, individual agents can purchase individual real estate E&O policies that do not share limits with others within their firm.