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A mistake on your part can cost your clients thousands of dollars plus months of stress. What can they do to recoup that cost? In many cases, the answer is to sue the real estate agent. How can you protect yourself and ensure you are covered in the event of a mistake on your part, an injury, or even an unreasonably litigious client? An Errors and Omissions (E&O) insurance policy is designed for just this type of eventuality. Errors and Omissions Insurance is a professional liability insurance that is offered for everyone from financial and investment advisors to insurance brokers to real estate brokers and agents. E&O offers protection in the event of a lawsuit and helps to pay legal fees, court costs, and any judgment awarded. In this sense, it is similar to malpractice insurance for medical professionals. Different insurance companies offer different policies with different degrees of coverage. If you are shopping for E&O insurance, be sure to compare both costs and coverage when making your determination. Is E&O required to get your real estate license?Some agents carry individual E&O policies while others rely on their brokerage’s policy. However, in the following states you are required to carry E&O insurance: Alaska, Iowa, Mississippi, North Dakota, South Dakota, Tennessee, Colorado, Kentucky, Nebraska, Rhode Island, Wyoming, Idaho, Louisiana, and New Mexico. Some brokerages will include your Errors and Omissions policy in your monthly desk fee, while others require you to provide proof that you have purchased E&O separately. Check with your broker to find out what their policy is in regards to proof of coverage, especially if you live in one of the states that require it. Should you get errors and omissions insurance even if your state doesn’t require it?Imagine telling a client to forego a home inspection in order to present a stronger offer. If the client subsequently determines that his or her new home is structurally unsound, it could cost tens of thousands of dollars to correct. While determining whether or not to get E&O insurance is a personal decision, it is important to understand the scope of your potential financial liability when determining whether or not to obtain coverage. There are a variety of reasons that home buyers and sellers bring legal action against real estate agents. These can include any of the following:
In addition, if someone is injured during an open house or home tour, you, not your brokerage, will be held personally liable.
What are the pros and cons of getting this insurance?As with any professional decision, it’s worth weighing the pros and cons to determine whether E&O insurance is right for you. Pros
Cons
The fact is that most E&O policies are quite affordable, even for new real estate agents starting out. The financial impact of a lawsuit, however, can be devastating. When you crunch the numbers, you’ll probably find that E&O is well worth the cost.  E&O insurance for real estate professionals is an extremely specialized form of professional liability insurance designed to protect the real estate agent and the brokerage from the risks associated with real estate transactions. These policies are your most important and often most used form of insurance that a real estate agency can invest in. For this reason, it is critical to secure a policy that is aligned with
the type of real estate business your agency conducts. Errors and Omissions insurance for real estate agents can vary drastically from one insurance company to another and it is extremely important to have an expert in real estate E&O as your trusted insurance guide to ensure you have the Right Coverage at the Right Price. At PBI Group, we work hard to balance the cost of insurance with the protection it must provide by giving you access to one of the strongest policies on the market. What Is Errors and Omissions Insurance in Real Estate?All professional services have their own form of E&O insurance to protect them from any errors or mistakes that may arise from conducting business with their clients. Real Estate professionals, like other service professionals for example:. Accountants, Lawyers, Doctors, Architects, etc, have their own specific risks that relate to their industry and business. Real Estate is a fast-paced, often risky business with high value transactions that are complicated and filled with emotionally invested clients. Trust is the cornerstone of a real estate agent’s relationship with their client and if that trust is broken for any reason, it could lead to an E&O claim. Errors and Omissions insurance real estate claims can be filed against a real estate agent for almost any mistake (real or perceived) or omission that a client feels harmed their transaction. When that time comes, it is important to have the best policy available to protect yourself and your company. What does errors and omissions insurance cover in real estate?E&O Insurance covers any person (employee or independent contractor) performing real estate services on behalf of the named insured entity listed on the insurance policy. PBI Group’s firm-wide insurance policies are written for the business entity that owns the real estate brokerage who can have numerous real estate agents or brokers performing transactions on the company’s behalf. The insurance company does not distinguish between real estate agents or real estate brokers; for the purpose of the insurance coverage, both are considered a real estate professional. At the most basic level, the coverage provided by errors and omissions insurance handles defense costs, legal costs, and court costs related to a claim. The insurance company is obligated to pay for expenses to defend the claim and any monetary settlements which may arise when dealing with the claim (minus the deductible). What scenarios are covered vs not covered by the insurance policy are too many to list; however, some examples of topics that a reputable E&O insurance company provides coverage for are: Fair Housing, Property Damage, Failure to advise previous water or flood damage, Subpoena response, Permit issue, Pollution, HOA issues, Listing property incorrectly (e.g. Sewer, Water, Square Footage, Easements and Open house incidents, to name a few). As you can imagine, the coverages are extremely detailed and nuanced with their interruption a matter of law. This is why selecting the right protection requires a real estate E&O expert to guide you through the policy to ensure the coverages are configured properly and the insurance company will step up when you need them the most. PBI Group’s insurance program – with exclusive access to Arch Insurance, a New York indemnity company – provides our clients with one of the strongest policies available for real estate agents. Our term coverage and extended reporting period policies are underwritten with care and precision to provide the Right Coverage at the Right Price. Various policy terms are available, such as per occurrence and aggregate policy limits, deductibles waivers, defense inside the limits and defense outside the limits, as well as endorsements for specific liability. As a real estate professional, you work hard to provide quality services to your clients, and PBI Group does the same to protect your firm and agents with the best coverage available in this ever-changing world. Common Mistakes that can lead to E&O claims against youWhen an agent or broker lists a property for sale, both they and their company are taking a risk. The same can be said for the business of buying, leasing, property management, vacation rental,etc. All of the services that a client benefits from come with risk to your firm. At least ninety percent (90%+) of claims are filed on real estate agents by clients who are buyers or sellers. It is in your best interest to lower your liability by implementing risk management procedures to reduce the likelihood of an incident that could lead to a claim. Some of the most common mistakes that lead to a claim are related to the property for sale. “Failure to Advise” is the most popular type of claim and is a catch-all term for a sell side agent not listing the property correctly or for the buy side agent not notifying the buyer of flaws, restrictions or obligations that are subject to the property. A strong E&O policy will provide cover for the real estate company when a seller or buyer claims negligence which has impacted the deal. Real Estate Errors and Omissions Claims ExamplesHere are a few examples of E&O claims. For a more comprehensive list of interesting claims worth learning aboutClick on our blog. Failure to Advise: In the age of Airbnb and other home sharing services, it’s now easier (and more appealing) than ever for homeowners to rent out their property for an additional income. However, no homeowner should assume that they can rent out their property with no strings attached, and no real estate agent should provide information to potential buyers that they cannot guarantee is factual. (Read More) Dual Agency Claims: In any real estate transaction, if a real estate brokerage collects commissions from both sides of the transaction, there is a significantly higher risk of claims of wrongdoing, including collusion, misrepresentation, or fraud. Whether or not these claims have merit is often immaterial to the legal defense costs; all a claimant has to do is file a lawsuit stating what s/he believes has transpired. (Read More) Who Needs E&O Insurance for Real Estate?All agents and brokers should have real estate E&O insurance and most already do for various reasons, most of all because it is required by a franchise, bank or state licensing board. Some states encourage their brokers and agents to purchase their own insurance via a state sponsored portal where they obtain an online quote in just a few minutes. These policies can be convenient to buy, but they are extremely rudimentary and are good for small agencies with fewer than 10 agents. When your business grows beyond 10 agents, PBI Group recommends a firm-wide E&O policy that provides broader protection without gaps in coverage between agents and the brokerage. Finding the Right PartnerErrors and Omissions insurance for real estate professionals requires an expert trained insurance professional to guide you through the coverage selection process. At PBI Group, we have written over 50,000 real estate E&O policies for thousands of real estate companies throughout the 50 states. Many of these companies you know; they are your peers in your state or part of your franchise network. PBI Group is founded on the principles of trust, partnership, fanatical service and, most of all one of the strongest E&O policies available. We do what we do because we believe there is a better way to buy professional liability insurance than online portals with cheap premiums and minimalist coverage or insurance agents who just want to sell you any policy. When your E&O policy comes up for review, don’t just accept your renewal quote without finding out the details of your coverage and the benefits that come along with being partners with an E&O expert. Let us know when your policy is expiring, and we will reach out to you to Get Started when the time is right. RECOGNIZE ANY OF THESE RESPECTED REAL ESTATE PROFESSIONALS?We Love our Clients!Keller Williams Wilmington I can't recommend Paul Bondy and PBI Group highly enough for real estate E&O insurance. With a background as an attorney, I've litigated against insurance companies and I know that for many, denying claims is just part of the way they conduct their business. I actually had the opposite experience with Paul and PBI. Our real estate company got sued in a lawsuit and there was a clear opportunity for the carrier to deny coverage. Honestly, I was shocked that they didn't deny coverage and really wouldn't have had a valid argument against them for doing so. But Paul went to bat for us-- like he said he would-- and the carrier actually chose to honor the claim. They then helped us hire a top notch attorney, and had the baseless lawsuit thrown out of court. The've earned our business many times over and Paul and PBI backed up what they said every bit of the way, and more. 5 4 3 2 1 Tagged with
Keller Williams Realty West I have never been so excited over an insurance experience as I was with PBI Group. Leighton Stultz is the perfect example of what I mean. We have been in contact for almost a year - he was not pushy or overwhelming, very friendly and cordial, called when he said he would, and answered all my questions in a timely manner. Clearly, he could tell I was a bit confused on some of the E&O insurance stuff and did not talk down - we talked as equals. Since he was my first line of contact with PBI Group, his manner made me want to continue. And I am so glad we did - the email with an E&O insurance quote where Paul Bondy introduced himself - that made it personal and clearly let me know that he cared about our company, and we were just not a number. 5 4 3 2 1 Tagged with
Century 21 Galloway Realty Two years ago, we were looking to make some changes to our real estate E&O policy and we were contacted by PBI Group. Right from the start Paul was very easy to talk to, always took the time to explain everything we needed to know, and made sure that all questions were answered. The process was very smooth and the communication with Paul has always been great. He's always quick to respond to any call or email and we are very happy with the service that Paul and PBI Group has provided. I would highly recommend PBI Group. 5 4 3 2 1 Tagged with
What is the errors & omissions insurance used for?Errors and omissions insurance (E&O) is a type of professional liability insurance that protects companies and their workers or individuals against claims made by clients for inadequate work or negligent actions.
What does errors and omissions not cover?E&O insurance protects your business against a lot of risks and lawsuits, but it doesn't cover everything. It will not help if you're sued for: Employment practices, such as wrongful termination or harassment. You'll need employment practices liability insurance to help cover these claims.
Why do insurance agents need E&O insurance?E&O insurance is coverage that protects insurance agents if someone accuses them of making a mistake and sues or files a claim against the business.
Why is errors and omissions insurance recommended for all licensees?Errors and omissions insurance also protects against accusations of negligence when your business is not at fault. In either case, E&O can help pay for attorney's fees, administrative costs, expert witness and consulting fees, court costs, and the eventual cost of a settlement or judgment.
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What does errors and omissions insurance do real estate
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