Real estate agents tend to wear many hats in order to stay competitive in their industry. Some agents take on additional parallel functions such as property management or preservation, title closing and even appraisals. As agents adapt to meets the needs of their community and add to their available services, they are also adding to their long list of liabilities. If a real estate agent is adding services that they aren’t properly trained in, they may unwittingly make an error that could put them out of business.
What is Errors and Omissions Insurance?
Errors and omissions insurance (E&O) can serve as a sort of malpractice insurance coverage for real estate agents. When an agent is protected with E&O insurance, their insurance company can defend any errors and omissions claims on their behalf and pay settlement amounts and/or attorney fees up to the limits of the policy.
Why Do Real Estate Agents Need E&O Coverage?
Even the most attentive agents can make a mistake or have an unintentional miscommunication with a client that can then lead to an E&O claim. Here are some common scenarios in which E&O coverage can help protect real estate agents.
- Transaction error resulting in a sale falling through. Even if the error is not the agent’s fault, the resulting claim and client backlash can tarnish an agent’s reputation.
- Failure to advise. Failing to disclose certain information to a buyer can result in a claim. Even if the agent was unaware, the burden of proof would fall on them to prove that.
- Failure to maintain the property as contracted, or failure to properly secure premises. When agents double as property managers they take on a lot more responsibility for a property. The extra risk can be mitigated through their E&O policy.
- Commingling or mishandling of funds. Commingling escrow money with general company funds, bookkeeping mistakes, failure to collect deposits or rent payments or lack of proper bonds for handling escrow money can all result in E&O claims.
- Incorrectly processing an eviction order. A simple mistake in the amount of time given for a notice to vacate can be grounds for a claim.
- Wrongful eviction or discrimination. Another example in which an eviction can go wrong for an agent. Tenants facing an eviction will sometimes use any means necessary to stay on the premises, meaning an eviction notice that doesn’t follow state eviction laws to the letter may result in a claim against the agent.
- Negligence of subcontractors. Agents can sometimes be held responsible for negligent actions done by subcontractors that they hired or even recommended their clients to hire.
About Connected Risk Solutions
At Connected Risk Solutions, we use our expertise and experience to provide insurance information and programs to those who serve long-term care and senior living facilities. Since 2007, we’ve been offering insurance and risk management plans designed to help our agents give their clients the ability to achieve continued growth while simultaneously protecting against loss, containing costs and increasing profitability. To learn more, contact us at (877) 890-9301.