As a real estate agent, you are charged with protecting the trust of your clients. You must help them navigate complex, sometimes emotionally taxing property sales or purchases while also providing them with high levels of professionalism and accuracy. Despite your best efforts in maintaining high professional standards and communicating clearly with clients while following best practices for your profession, mistakes may still happen and this is why errors and omissions insurance (E&O) is necessary for real estate professionals.
E&O insurance (or professional liability coverage) helps cover legal fees, judgments or settlements that result from allegations that you misrepresented a client or failed to perform your duties according to industry standards of care. While some states require real estate agents and brokers to carry E&O coverage as part of their license requirements, others do not; clients may still require it as part of contracts they sign. Even if your state doesn’t mandate E&O insurance as protection against costly lawsuits.
As a real estate professional, your E&O insurance needs depend on your specialty. For instance, commercial real estate agents require coverage that addresses their most likely transactions; while residential agents should opt for something more general.
Your real estate errors and omissions insurance can also include additional coverage options such as loss of rental income protection or crime protection for added peace of mind while helping reduce premium costs and make premiums more cost-effective.
Mistakes happen more frequently than you think, particularly if you are an inexperienced professional. For example, if a client notices there is an unforeseen lien on a home you showed them without disclosing, they could file suit against you alleging negligence.
Another benefit of E&O insurance is that it covers past work as well as future transactions. That way, if a mistake from an earlier sale rears its head again and costs come due, your E&O policy may help cover some or all of the money owed.
NEXT provides more than E&O insurance to help businesses manage risk. For instance, we provide workers’ compensation and general liability policies for small businesses as well as commercial auto coverage for business-owned vehicles. If you would like to learn more about our business insurance offerings for real estate practices or have questions or need quotes for them please reach out – our staff are standing by! In addition, a free risk management app that lets users view certificates of insurance online as well as file claims can also be downloaded via Apple App Store or Google Play.