Coverage for professional liability claims for real estate agents, property managers, mortgage brokers, and other professionals in this industry is needed for the unique exposures that these individuals face. This coverage is for claims of errors and omissions or negligence in the course of instructing, advising, or suggesting a course of action to your clients and any resulting fallout.
For example, you could face a claim arising from your failure to properly qualify a lender who subsequently becomes delinquent on payments. In such a case, that individual (plaintiff) may have been given a second mortgage on his or her home to pay off their credit card debt. Let’s say your client ends up deeper in debt and is unable to pay their credit card debt, or the first or second mortgage. They may turn around and sue you because they claim you should have known their history and the fact that they would have been unable to pay.
Lawsuits of this type are not uncommon
Whether you’re assisting with loan processing or refinancing a business, when the services you provide results in financial injury to your client, any lawsuit resulting from this type of accusation could have serious repercussions. You could likely end up in court and possibly end up in complete financial ruin.
By having this insurance in place it will assist you with court fees, any ensuing defense costs, as well as paying the resulting damages or settlements that the court may determine necessary, up to the coverage limits of the policy. However, the cost of defending a claim of this type can be substantial, and may even surpass the available coverage limits (which can ultimately reduce the amount of funds left to cover damages). As the insured, you can have your policy written to pay defense costs outside of any liability limits written into the policy.
Most people agree that the protection provided by an Austin Professional Liability Insurance policy is necessary in order for real estate professionals to survive in the litigious world in which we live. Not only do you need to be concerned about being embroiled in a lawsuit, but you also need to consider the amount of damage this can bring to your reputation as well. Managing this type of risk is vital to your continued success.