There are risks involved in the real estate business that can leave an agency and its employees vulnerable to liability; therefore, Errors and Omissions insurance is a necessity in the real estate business. A mistake in judgment, negligence, or the exclusion of important facts about a property can lead to litigation and potentially the loss of a business if it is not covered by Errors and Omissions insurance. There are choices and flexibility when choosing what kind of coverage options to choose, and a range of premiums.
The coverage, premiums, limits and deductibles for E & O insurance will be determined by commission income, number of people being covered, and how often transactions are conducted in a real estate business. In addition to residential real estate agents and firms, commercial brokers and rental agents also need Errors and Omissions insurance. Their coverage and premiums will vary depending on these categories of the business and where their possible risks lie.
Some of the areas that Errors and Omissions insurance protects from are defense costs, loss of earnings, and personal injury. Optional coverage for fair housing and discrimination, environmental hazards, and radon are also available and relevant to the real estate industry. An E & O contract needs to be customized and include the dollar amount for each liability, a deductible amount for each liability and defense costs, an explanation of the policy services the company provides, and retroactive dates for claims.
Typically, commercial General Liability insurance policies do not cover many types of claims, and Errors and Omissions insurance can cover W-2 employees as well as subcontractors. Errors and Omissions insurance is also known as professional liability insurance, malpractice insurance, or directors and officers (D & O) insurance.
There are many companies now offering Errors and Omissions insurance for the real estate business as well as home inspectors and other service companies. Being prepared for inevitable mistakes that can be made by employees and contractors with E & O insurance companies can save a real estate business from significant financial losses.
About the Author:
Grace Enderlein is a freelance writer and editor. "Errors and Omissions Insurance for the Real Estate Business" notes the importance of protecting a business from financial losses from litigation with E & O insurance from Eiipro.com.
