Real estate can be an intense business with high-value transactions and emotionally invested clients, which is why even experienced real estate professionals may make errors that result in client losses – potentially leading to lawsuits for breach of contract, error and omissions insurance can help manage potential risks and protect business finances.
E&O (Errors and Omissions Insurance), also referred to as professional liability coverage, protects you against legal costs should one of your clients file suit involving services provided by your business. Real estate agents, brokers and appraisal firms alike can benefit from having errors and omissions coverage; some states even mandate this coverage as mandatory compliance requirements for these professionals.
Real Estate Errors
One of the primary sources of errors and omissions claims for real estate agents lies with giving wrong advice to their client, such as an overestimation of property values or providing inadequate guidance regarding certain requirements of properties that fall outside your expertise. Failing to deliver accurate information can easily become grounds for E&O claims against any professional – it happens all too frequently!
E&O applies to real estate when information on a property disclosure form is omitted without adequate explanation or clearance from your client. Even though this might seem minor, if something unexpected comes up when buying their new home and they sue for damages they could easily sue for them and you. Therefore, it’s essential that agents read over disclosure forms carefully prior to sending them off to clients.
Property damage is another frequent basis of real estate E&O claims. Accidentally damaging a client’s property during a showing may constitute negligence; similarly, not following through with promised repairs or paperwork could also make you subject to claims which can be costly to defend against and even hurt your reputation.
E&O policies typically exclude claims related to dishonest behavior and polluted properties, yet can still provide valuable business insurance protection. Consult a PBI Group representative about finding coverage that fits best for your company.
Since 1986, Victor has provided real estate companies and their owners with assistance in managing risks associated with day-to-day operations. We understand how to tailor an errors and omissions policy specifically tailored to meet your business’s needs; our experienced insurance team is on hand to guide the search. As an NAR REALTOR Benefits Program partner, we also offer members-only pricing for state-of-the-art real estate E&O coverage. Get started now by requesting a quote or calling us; alternatively sign up for our weekly newsletter which gives advice on avoiding common E&O missteps! We look forward to speaking with you!