When obtaining a real estate license, it is important to remember that it is best to have maximum protection for real estate. For this reason, the question arises of how much E&O insurance is for realtors, which allows you to protect yourself against errors and omissions.
This insurance, also known as professional liability insurance, will help protect realtors and the firm. This way, you can protect yourself against losses due to accidents with professional services.
What coverage does errors and omissions insurance provide?
Generally speaking, E&O insurance will cover losses due to negligence, errors, and omissions. This may include reimbursement of attorney’s fees, court, administrative, and settlement costs due to legal action against our firm.
Such policies include but are not limited to:
- Failure to make reasonable accommodations for a client with a disability.
- Failure to comply with fair housing law.
- Failure to disclose the environmental attributes of a priority.
- Error in contractual agreements resulting in a monetary loss.
- Cyber liability.
It should be noted that E&O insurance policies will not cover bodily injury or property damage when holding an open house. In these cases, a separate general liability policy should be sought to protect the property in these situations.
Coverage offered by the insurance
Within the coverages that this insurance offers, we find:
- Allegations of negligence.
- Professional errors.
- Failure to deliver promised services.
- Inadequate advertising.
- Innocent misrepresentation
It should be taken into consideration that each coverage has different types of limitations. In the last case, we must consider that an intentional misrepresentation will be deemed fraud and is not covered by E&O insurance policies.
We must take into consideration the coverages they offer, with limits that are around $10M. However, everything will depend on the coverages that will be found in each of the policies.
What should a client do to substantiate their claims?
Customers dissatisfied with the service will not simply rely on unsubstantiated claims. The real estate agent must have failed to meet the customer’s reasonable expectations to take legal action.
The Basic industry standards or adhering to the parameters outlined in a contract result in damages. In these situations, it is best to seek the advice of a licensed attorney immediately.
Is it necessary to obtain E&O insurance?
It is not surprising that there are different insurance requirements for real estate agents in other states. If we talk about states like Nebraska, North Dakota, New Mexico, Rhode Island, or Texas, it will be mandatory by law to have an E&O insurance policy.
However, the recommendation in all cases will be that all real estate agents and brokers have some form of E&O insurance. Real estate transactions will never be small, and even if you are going to operate outside the states where this policy is mandatory, it will be better to obtain it.
Otherwise, in the event of any accident, there may not be coverage available for the problems you could have.
What is the price of these insurance policies?
It is vital to consider the cost of the E&O insurance policy, which can vary from agent to agent. Policy premiums are based on the type of coverage, how much coverage is selected, and the policy period.
The premiums for these insurance policies can be under $600 per year, although the most common is between $600 and $1,200. Some agents will pay more than $1,200 per year, which varies depending on each situation that will be considered.
How do you file claims for these real estate insurances?
If we are real estate agents, when we have made a mistake or have been named in a lawsuit, we need to know how to file a claim. In these cases, the first thing to do is to review the insurance policy and gather the following information:
- Business name.
- Policy number and E&O coverage details.
- Current contact information.
- A brief description of the incident, including the date we first became aware.
Ideally, contact an insurance agent and fully inform them of the situation. In these cases, there may be multiple questions about coverage, deductibles, and the options as a policyholder if the problem goes to court.
We will need to document everything in all cases, including all interactions with the insurance company.