Errors and Omissions Insurance for real estate agents is often known as E&O insurance, or Errors & Omissions (E&O). This coverage can help protect your business from financial damages caused by mistakes in your work. E&O policies often come bundled together with general liability policies and commercial auto policies so as to provide comprehensive protection.
Even the most diligent real estate agents may make mistakes that will cost their business dearly in terms of litigation expenses and loss. An agent might omit disclosing a crack in a home’s foundation before selling it; or give wrong zoning information that results in financial loss for buyers. Either way, litigation could ensue that could cost your business dearly.
E&O insurance is essential for real estate agents and brokers, whether independent contractors or working at large agencies alike. As part of professional liability, E&O covers legal costs in case they’re sued for negligence as well as any compensation or damages that must be paid out – both costs you could potentially owe to those suing you and any compensation or damages due. Having this coverage should be seen as essential.
E&O policies for real estate agents can cover expenses related to investigating claims and defending court proceedings that arise from them, which can be daunting without the support of an experienced lawyer. A policy can also provide assistance if regulatory bodies or government entities investigate your practice.
Some states and lenders require real estate professionals to carry Errors & Omissions insurance (E&O), while many brokers find it to be beneficial regardless of state requirements or lender mandates – it helps build your professional image while protecting you financially in case of disputes with clients. Even without such mandates in their state or lender requirements, brokers often opt to have E&O coverage anyway as a good way of building their professional image and safeguarding themselves financially in case a conflict arises between client/broker.
Dependent upon the details of your policy, certain claims such as property damage may not be covered; for instance, if damage occurs while showing a prospective buyer property you own or manage, chances are your E&O insurance won’t cover repair costs. Your policy likely won’t cover the costs associated with cleaning up polluted property if it falls under your responsibility, nor may any allegations of misconduct or criminal activity be covered under it. If you engage in fraud or misappropriation of funds when handling transactions, your insurance may not cover your losses. Therefore, it’s crucial that any errors or omissions be reported promptly to your insurance company and if unsure what exclusions apply to your policy consult an experienced agent for more advice.