Even minor mistakes during the real estate transaction process can have major repercussions for your clients and can even be legally risky, costing both time and money to rectify. Errors and omission insurance is designed to help mitigate this financial risk; we will discuss what E&O stands for and its costs, in addition to covering legal defense expenses in this article.
Errors and Omissions insurance (or E&O for short) provides professional liability coverage to real estate agents and brokers, such as legal fees, court costs and any compensation or damages awarded against you for mistakes in your work. It differs from general liability coverage which generally only protects against physical risks such as property damage and bodily injuries.
Real estate professionals are charged with multiple complex tasks during the buying and selling process, from providing advice on transactions to giving accurate property descriptions. Mistakes happen; whether it’s missing disclosure, an administrative error or violating RESPA, errors may cause costly issues for clients as well as potentially jeopardize relationships between agents. Unfortunately, even those most attentive agents can still make errors that interfere with clients’ transactions.
Real estate E&O insurance provides peace of mind and protects your career in such cases, even if a claim proves without merit; E&O cover can cover legal costs so you won’t risk the possibility of losing either business or home as a result of a dispute.
E&O insurance can also play an integral part in protecting your reputation. Even when claims prove false, public misperception of you and/or your brand can have dire repercussions for both career advancement and brand recognition. With E&O coverage, expenses associated with damage control such as hiring a PR firm to manage narratives can be covered to restore image.
Cost of Real Estate E&O Policies Dependent Upon State / Type Coverage | NEXT Realty Group Ltd. The costs associated with real estate E&O policies depend on several factors such as your state, type coverage chosen and other variables. NEXT tailors policies specifically to clients needs in order to reduce expenses; on average most clients typically pay between $25 & $75 monthly.
Errors and Omissions insurance (E&O insurance) for real estate is not typically required by most states; however, other authorities such as franchise or bank partners often make E&O coverage mandatory. Furthermore, signing up for this protection can help safeguard you against unanticipated legal challenges, uphold professional integrity and provide safety net in an industry known for being litigious.