Many states require real estate professionals to carry errors and omissions insurance (E&O), which offers financial protection in case a client alleges their work caused financial harm to them. Even in states without E&O requirements, brokers should still view it as an essential investment for their business; one claim could lead to fines, legal fees and other expenses regardless of its validity or otherwise.
Real estate E&O insurance usually provides coverage against lawsuits and settlements up to your policy limits, so it is crucial that brokers review the limits and coverages to make sure that it fits with their specific risk requirements. Some policies may also exclude certain claims such as bodily injury or property damage which should also be familiarized with so as to avoid coverage issues in future claims.
As well as protecting your professional image, a real estate E&O policy can also help build trust between yourself and clients and enhance credibility in an industry prone to human errors. Having this coverage shows your clients you take their responsibilities seriously.
Like medical malpractice claims, most E&O claims don’t arise out of negligence or gross misconduct but instead from simple mistakes that have serious repercussions for clients. Examples could include failing to follow-up on repairs as promised or providing inaccurate descriptions or advice; in such instances, clients could potentially file suit to seek damages for any financial harm caused by these mistakes.
Errors and omissions claims are common in real estate, and even those who take every precaution may make errors and omissions mistakes. An E&O policy can protect your business from these costly errors, so that it can focus on what matters most: real estate sales and acquisition.
E&O policies are an indispensable asset for both real estate agents and brokerages as well as independent contractors, without which their business could face serious financial complications should they become subjects of litigation related to errors or omissions in professional services provided.
While it can be tempting to forgo real estate E&O coverage, remember that legal costs associated with an E&O suit could exceed six figures and bank partners and other business associates may require one as part of doing business together. McGowan provides an easy online application process which can have you up and running in 24 hours!