Real estate professionals provide essential support in property transactions. Their tasks range from listing properties, negotiating deals, and helping clients navigate the complex home or commercial property buying process to being subjected to errors and omissions lawsuits arising from professional duties they performed incorrectly or omitted. Errors and Omissions Insurance for Real Estate Brokers is designed to protect both businesses as well as provide financial security should a legal dispute arise – some states mandate real estate broker E&O insurance; potential clients may also request this type of coverage coverage before engaging real estate brokers who perform these functions properly.
E&O insurance for real estate brokers typically provides legal expenses, settlement costs and judgments or awards related to claims of negligence or misrepresentation brought forth by your clients against you. Often included with policies are coverage for agent-owned properties which pose higher risk than third-party transactions – however it’s wise to carefully read over its exclusions as you may require additional general liability coverage for these kinds of transactions.
Although mistakes can happen in any industry, the consequences can be especially costly in real estate. From misrepresenting square footage or failing to disclose relevant details to clients, these errors can have lasting repercussions that could put your brokerage at risk for revenue and reputation loss – yet errors and omissions insurance could help protect you against these claims and avoid financial ruin altogether.
Costs associated with E&O insurance for real estate brokers will depend on several factors, including deductibles and policy limits. Typically, higher deductibles and greater experience are associated with reduced premiums; additionally, your broker can often negotiate with their insurer to add back coverage for exclusions that might otherwise apply at an additional fee.
Brokerage firms sometimes provide E&O policies for all licensees associated with them; however, when an agent leaves to open up their own firm they must purchase individual E&O insurance and transfer any existing “tail” coverage onto a new policy.
Check the limits of your E&O insurance policy carefully as common exclusions include bodily injury and property damage claims. While most policies provide full coverage, some only pay out up to a certain threshold limit. You could purchase additional general liability coverage to cover judgements or settlements which exceed its limits; similarly if hosting an open house results in someone becoming injured you might require taking out separate personal injury insurance as well.