As a real estate agent, your responsibility lies with helping people buy and sell property. While this career path may be lucrative and potentially risky – even experienced agents may make errors that cost their clients thousands or cause months of emotional trauma – errors and omissions insurance (E&O) should always be part of any real estate business plan.
Real estate E&O insurance provides protection from the financial fallout associated with lawsuits filed over errors, mistakes and injuries related to real estate transactions. It covers legal fees and judgments to help avoid bankruptcy in case of major claims; similar to malpractice coverage for medical professionals.
No matter if you perform one appraisal per year or close hundreds of sales each year, real estate E&O insurance should protect against allegations of negligence. Anyone providing services to clients for a fee runs the risk of being sued over mistakes or failure to perform. Even small human errors like misspellings or typos on legal contracts could cost real estate professionals dearly.
One unfortunate customer may accuse even the most careful agents of negligence, for instance claiming they failed to disclose mold or dangerous conditions within a property. Another common accusation against agents is failing to fulfill promised repairs or paperwork and in many instances this can lead to lawsuits of up to $1 Million dollars against real estate agents.
Although some agents rely on their brokerage for E&O coverage, individual brokers should have their own coverage to protect themselves. Working with multiple clients increases your risk of making errors that require E&O protection to avoid financial implications of mistakes being made and can get a tailored policy tailored specifically for their needs and budget.
Agents should also consider purchasing general liability coverage as it provides indemnification in case any damages occur during showings or work related activities; for instance if a client trips over an electrical cord while viewing property. In such an instance, general liability coverage would cover repairs or replacement.
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