How does Errors and Omissions insurance protect real estate professionals?
Errors and omissions insurance for real estate professionals helps protect your business if you make a mistake in your work, like forgetting to disclose a home’s foundation issues before a sale is finalized or not submitting important documentation to a lender on behalf of your client.
Often simply known as E&O, this type of professional liability insurance provides support if you have a business disagreement with a client, even if you’re at fault. In many cases, it’s bundled with your general liability insurance to make sure you have sufficient coverage for your line of work.
With the right errors and omissions insurance, real estate agents, property managers, real estate investors and mortgage brokers can manage potential client disputes without threatening the financial stability of their business.
What does Errors and Omissions cover in real estate?
Real estate agents, property managers and other real estate professionals are responsible for providing detailed information to their clients and handling complex property rentals, sales and purchases. If you make a mistake in this job, the financial repercussions can be significant.
For example, a real estate broker might provide incorrect information about a property’s features or forget to have their client sign an important legal document during closing. E&O insurance can help cover the legal costs if a client sues over these types of errors.
An errors and omissions real estate insurance policy can help cover a variety of costs, such as:
- Professional negligence (actual or alleged)
- Legal defense costs
- Legal judgments
Learn more about what real estate errors and omissions insurance covers.
Why do real estate professionals need Errors and Omissions insurance?
Buying and selling property is an expensive endeavor. In many cases, it can also be an emotional or stressful process for the clients. Because real estate agents professionals are responsible for advising their clients along the way, they carry a lot of responsibility.
If things don’t turn out the way your client hoped they would, they may place the blame on you. A lost legal battle could damage your reputation, which is incredibly important in the real estate industry.
If you do get into a legal dispute with a client, real estate broker errors and omissions insurance can assist with financial support. Without E&O insurance, your business may suffer financially from the costs of defending yourself or providing compensation to the client.
Some states require that real estate agents carry errors and omissions coverage. Additionally, potential clients may require that you have E&O insurance, especially if you’re assisting in the purchase or sale of high-value properties.
What are some common risks faced by real estate professionals?
Here are some of the common risks real estate professionals could be exposed to at work:
Business mistakes
Even if you’re very thorough in your work, you could still make a mistake when working with one of your clients.
For example, your client could lose money If the documents for closing on a home were not prepared correctly. Errors and omissions insurance can help cover the costs of rectifying your mistake.
Accusations of professional negligence
You’re expected to act in the best interests of your clients when you work as a real estate agent. When you fail to do so, there is a potential for financial damages to come into play.
If you forget to disclose a defect in the home’s foundation, for example, the client might file a lawsuit against you when they find out it will cost $10,000 dollars to fix. Your E&O insurance would help cover some of the expenses up to your policy limit.
How much does Errors and Omissions insurance for real estate professionals cost?
NEXT customizes errors and omissions insurance policies to the needs of each client. This helps to minimize costs by providing you with the right coverage for your business.
Errors and omissions insurance for real estate professionals can cost as little as $25 per month.**
E&O insurance is a type of Professional Liability insurance, which costs most of NEXT customers $25 to $75 per month.
There are a number of factors which affect the monthly premiums for this insurance, including:
- How many employees you have
- The state where you work
- How high you set your limit
- Your claims history
- Your work experience
NEXT offers tailored business insurance for real estate professionals
NEXT offers the best real estate insurance options for small business owners in the real estate industry with affordable rates and convenient online services. We make it easy to get errors and omissions insurance quotes in just a few minutes.
Using your mobile device or computer, you can complete a real estate errors and omissions insurance application, compare insurance options, purchase coverage and get an instant certificate of insurance.
Get a quote online today.
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