If you’re a real estate agent, you likely have concerns about the different factors that can impact your current and future earnings. Though commission decreases, online competitors, and commoditization can play a role, being sued due to errors and omissions may be an even larger risk. National City business insurance experts discuss errors and omissions insurance and the reasons why every real estate agent should have this additional liability coverage.
What Is Errors & Omissions Insurance?
In the real estate world, professional liability insurance is known as errors and omissions (E&O) insurance. It’s the equivalent of malpractice insurance for medical practitioners. Though real estate doesn’t involve open-heart surgery, even the most mindful real estate pros can find themselves being sued. National City errors and omissions insurance protects real estate agents and brokers against litigation costs for mistakes they make on the job.
What Errors & Omissions Issues Can Arise in a Real Estate Transaction?
Real estate agents frequently encounter incidents that can put them at risk for lawsuits from their clients. Mold contamination, boundary disputes, unknown insect infestations, or undisclosed water damage are among the things that might be covered under an E&O plan. Believe it or not, in a boundary dispute the buyer can claim the square footage surrounding the home is smaller than originally advertised. Brokers can also find themselves in court if they don’t disclose to the buyer there is a lien on the property, which means the home is still subject to the previous owner’s debt.
What Does E&O Insurance Cover?
Real estate industry organizations strongly suggest their members get E&O coverage either individually or through their real estate broker. When an agent or broker has E&O coverage, the insurer takes on most of the legal costs. If an agent gets hit with a claim, the insurer hires a lawyer and arranges the defense strategy or settlement negotiation.
As suggested by the name, E&O policies don’t cover outright fraud. They’re typically most useful when an unhappy buyer sues an agent for an undisclosed defect on the property, when the agent has unknowingly misled the purchaser about the property, or if there’s a contract breach.
Real estate agents aren’t the only ones who should be carrying E&O insurance. This additional liability insurance is crucial for anyone running a business. To learn more about E&O insurance and why your agency needs it, get in touch with American Tri-Star Insurance. In addition to commercial insurance, we also offer affordable home, health, bond, and auto insurance National City residents trust. Give us a call today at 619-474-3900 and one of our knowledgeable representatives would be happy to assist you.