Making mistakes is an unfortunate part of the real estate business, and becomes an issue when that mistake leads to litigation. While no one sets out to give poor advice, or intentionally forgets to sign an important document that affects the closing on a client’s dream house, these sorts of errors often due occur.
Regardless of whether the mistake was on accident or due to intentional neglect, most businesses need (and carry) errors and omissions insurance coverage to protect their companies. By choosing to forgo purchasing a professional liability insurance product like E&O coverage, a real estate agency or agent is putting their financial future at serious risk.
E & O coverage is not a typical insurance product
An E&O policy that doesn’t cover physical and tangible items like the office or a company car. Instead, it protects intangible valuables such as advice and ideas. Providing real estate advice to a client and if, for whatever reason, the deal falls through; odds are that the client may blame it on bad advice, or mishandling of paperwork. There are instances where the client may decide to take the matter to court to recoup actual and perceived financial losses.
By having an E&O policy, the insurance company will cover most costs connected to the trial, as well as any judgments awarded to the other party. This is a valuable type of protection that most businesses would be foolish not to have.
The best time to buy a policy is at the onset of meeting with clients. Purchasing insurance after a mistake is made doesn’t do much good. These policies are not retroactive and will not cover the individual or the business when the incident occurred beforehand. Also, many clients will not work with real estate agents that are unable to produce proof of professional liability coverage.
While it is true that many large real estate firms are already covered by E&O insurance policies that doesn’t mean that individual agents don’t need their own coverage. In fact, that coverage may be minimal; therefore it is up to agents to protect their own financial futures.
To find the right errors and omissions insurance coverage, consult with an insurance expert that has experience with professional liability coverage, as he or she can be vital in choosing the right insurance product. They will also be able to provide expert advice concerning which companies offer the best deals.