- Errors and omissions insurance
Errors and omissions insurance (E&O) helps cover the cost of a lawsuit if a client claims your work was inaccurate, late, or never delivered. It’s sometimes called professional liability insurance.
E&O protects against mistakes and oversights
An error on a title or an oversight in a property listing could lead to a lawsuit. Whether you are sued by a litigious client or you made a genuine mistake, errors and omissions insurance can help cover legal costs that might otherwise impact your business.
This policy provides liability coverage related to:
- Accusations of 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.
What coverage can errors and omissions insurance provide for real estate professionals?
Accusations of negligence
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:
- Dual agency
- Breach of fiduciary duty
- RESPA violations
E&O can help pay legal expenses related to allegations of professional negligence, whether or not you are 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’s 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 that 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, E&O could cover the agent's legal costs.
Failure to deliver promised services
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 could help pay the cost of hiring a lawyer and other expenses related to a lawsuit.
Other policies for real estate professionals
Errors and omissions insurance provides critical protection against lawsuits related to your work, but it does not protect your business from every risk. No matter your area of expertise, accidents can happen. Other policies that real estate professionals should consider include:
Business owner's policy: This policy combines general liability insurance with commercial property insurance, typically at a lower rate than if the policies were purchased separately.
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.
Workers’ compensation insurance: This policy is required in almost every state for real estate businesses with employees. It can cover medical expenses for work injuries.
Get free quotes and compare policies with Insureon
Are you ready to safeguard your real estate business with E&O insurance? Complete Insureon’s easy online application today. Once you find the right policy, you can begin coverage in less than 24 hours.