Errors and omissions insurance for real estate businesses

An error on a title or an oversight in a property listing could lead to a lawsuit. Whether you're sued by a litigious client or you made a genuine mistake, errors and omissions insurance, or E&O, can help cover legal fees that might otherwise impact your business.

This policy provides liability coverage related to:

• Accusations of professional negligence
• Professional mistakes
• Failure to deliver promised services

E&O protects you from client accusations, whether or not you're to blame. It's a key policy for real estate professionals—and it's even required for agents and brokers in some states.

Real estate agents and brokers may be required to carry E&O coverage, also called professional liability coverage, depending on their state or licensing requirements. In some states, professionals who don't carry E&O coverage may be required to disclose that fact to clients.

Even when it's not legally required by the state or organizations like the National Association of Realtors (NAR), many brokerages require agents and brokers to maintain E&O insurance as a condition of employment or affiliation.

This coverage can help protect both employees and self-employed real estate professionals from costly lawsuits related to errors, omissions, or alleged negligence in their professional services.

Whether you're a real estate agent, broker, property manager, or other real estate professional, E&O coverage can help pay legal and defense costs associated with covered claims, which can include:

No matter your specialty, you could be accused of negligence or failing to uphold professional standards. Real estate agents in particular need to be aware of risks related to property condition disclosures. That might include failing to inform a buyer about:

• Water seepage in a basement
• Termite damage
• Black mold
• Ice dams on a roof

It's easy to miss a problem with a home, even when you hire inspectors and appraisers. If clients claim you omitted information that might have deterred them from buying a property, you could be sued and held liable.

Other negligence claims could involve:

• Fair housing/discrimination
• Dual agency
• Breach of fiduciary duty
• RESPA violations

E&O can help pay legal expenses related to allegations of negligent actions, whether or not you're at fault.

If a client claims you made an error that led to financial loss, you could stand to lose a great deal—especially considering the size of property transactions. For example, a real estate agent who misstates the amount of square footage in a property could face a major lawsuit.

When a mistake leads to a lawsuit, errors and omissions insurance for real estate agents helps cover:

• Attorney fees
• Court and witness costs
• Settlements, judgments, and fines

Even the most meticulous agent could receive inaccurate information that leads to an error in a listing. For example, the seller could tell the agent their home was connected to a sewer system when it in fact had a septic tank. If the buyer sues to recoup the cost of connecting to the city's system, real estate errors & omissions insurance would cover the agent's legal costs.

It’s possible you may forget to follow through with repairs, paperwork, or some other task. If a client claims a commercial landlord failed to provide agreed-upon repairs, for example, an errors and omissions insurance policy would help pay the cost of hiring a lawyer and other expenses related to a lawsuit.

Real estate professional liability insurance provides critical protection against lawsuits related to your work, but it doesn't protect your business from every risk. Other policies real estate professionals should consider include:

General liability insurance: A general liability policy covers common business risks, such as customer injuries, customer property damage, and advertising injuries.

Commercial auto insurance: This policy covers vehicles owned by a real estate business. It typically pays for accidents and damages related to theft, weather, and vandalism.

Commercial umbrella insurance: Umbrella insurance provides additional coverage for liability claims made on general liability, commercial auto, or employer’s liability insurance, once a policy's limit is reached.

Business owner's policy (BOP): A BOP combines general liability coverage with commercial property insurance, typically at a lower rate than if the policies were purchased separately.

Cyber insurance: This policy helps real estate businesses survive data breaches and cyberattacks. It can help cover client notification expenses and other associated costs.

Workers’ compensation insurance: Almost every state requires workers' comp for real estate businesses with employees. It can cover medical expenses for work injuries.

Lessor's risk only insurance (LRO): This policy protects commercial landlords from tenant lawsuits over property damage and injuries.

Surety bonds: Real estate professionals sometimes need a surety bond to get licensed in their state. It acts as a financial guarantee they'll comply with contract terms and regulations.

Are you ready to safeguard your real estate business with errors and omissions coverage?

Simply complete Insureon’s easy online application today. We partner with top-rated U.S. insurance companies to get you the best E&O insurance. You can also consult with an insurance agent on the types of business insurance you need, and how to get affordable coverage within your budget.

Once you find a policy that fits your needs, you can begin coverage and access your certificate of insurance (COI) in less than 24 hours.