NYC Insurance Blog

3 Ways E&O Insurance Can Protect Real Estate Agents

Real estate may be a successful and rewarding profession. However, mistakes happen. A deal may break apart as a result, and your clients may decide to pursue legal action. You don't want to be left vulnerable. Errors and omissions (E&O) insurance for real estate agents can help in this situation.

What is E&O Insurance?

When you work in real estate, an error and omission, or E&O insurance, is professional liability coverage that covers your business from any unprecedented expenses in case a client accuses you of:

• Making a mistake that caused them financial harm
• Professional negligence

In short, E&O insurance is a sort of professional liability insurance that shields professionals, such as real estate brokers and agents, from lawsuits alleging that they committed a mistake while delivering services to their clients. 

Therefore, in the event of a lawsuit or claim, professional liability insurance can help you avoid the expensive costs of defending yourself. E&O insurance covers many claims not covered by typical liability insurance.

What does E&O Insurance cover?

Even the most seasoned professionals make a mistake once in a while. And when this happens, and you find yourself in court, an Error and Omission insurance will help you cover some of the expenses.  Let our agency guide you through finding the right professional liability.

The E&O insurance covers:

Defense Expenses

E&O insurance can often help pay defense costs incurred because of a claim brought against you or your company by a customer dissatisfied with your services.

Damages

Insurance may provide coverage if your case results in judgements or settlements of claims resulting from services or advice provided to clients, errors, and omissions. 

Disciplinary actions

Having errors and omissions insurance might be beneficial when you land in court due to an issue with licensing, regulatory, or enforcement agencies. 

Subpoenas

E&O insurance can help cover any fees incurred due to receiving a subpoena if you are determined to be a witness in a case. 

Lost earnings

Due to time spent in depositions and trials, client claims might result in significant income loss. An errors and omissions insurance may cover this loss of income

Personal Injuries 

Some E&O insurance coverage may help pay the costs of personal injury claims, though this is not always the case. This could involve slander or libel claims filed by another business when your employees rant about customers on social media, etc.

How does E&O help real estate agents?

After learning what the Error and Omission insurance covers, how does it help real estate agents?

Mistakes that impact deals

Consider a scenario:

One of your agents enters negotiations with a potential client about a property. When the deal is almost over, they visit the property and notice you left out crucial information about its condition. 

The client may decide to sue your business, and E&O insurance will help with any related expenses. Be sure to have yourself covered fully when selling homes to others, get a quote today!

Not delivering on promises

Consider another incident:

a) You tell your client that the seller may or may not cover the closing costs. However, you are unsure and need to confirm with them, which later turns out not to be the case. 

b) An angry customer thinks you did not negotiate the best price for them and decides to take you to court.

There is a misinterpretation of advice in the first case, and in the second case, the customer is just angry with you. When you are negotiating a deal to sell a property, part of your job as the agent or broker is to deliver the client's best interests. However, the client may feel you did not do your best and sue you.

Complains of negligence

Say:

During a negotiation, you omit some information about a property or fail to notify the customer what documents they need for the deal.

Both these cases show negligence, as per the real estate industry. Remember, your role as the broker or agent is to serve the customer's best interest. Making a mistake while providing services could land you in court.

For any of the 3 cases above, E&O insurance is the business insurance you should get to keep your agency alive. Call us today to get covered fully and correctly, we're here to make buying insurance easy!

What are the best policies to pair with an Error and Omission Insurance?

While E&O insurance is a perfect professional liability cover, you need more protection for your business. Some of the best policies you can take on include:

1. Commercial auto insurance- for the personal vehicle you use to conduct professional business
2. Worker's compensation- for when your employees get into accidents and need medical care
3. General liability insurance for when your clients sustain injuries from accidents on your premises

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