Errors and omissions insurance coverage, also known as E&O insurance, is an integral part to protecting any business that provides a professional service, and real estate businesses are no exception to that rule.
Essentially, according to the Insurance Journal, “E&O coverage provides protection for you in the event that an error or omission on your part has caused a financial loss for your client.” There is a good chance you have worked very hard to build a great reputation. The last thing you would need is to leave yourself open to a lawsuit that could risk your business and your livelihood.
So, what should a professional services business, or more specifically a real estate business owner, looking to protect their company look for in an E&O insurance plan?
First off, it is always good practice to shop around, compare small business insurance plans and find what suits your needs the best. There is no need to settle with the first company you come across.
The very first thing you should look for, in an E&O insurance plan, is confirmation that it covers the very basics (i.e. ensure it pays any claims that might come about because of an mistake on your part). Obviously, it should, at the very least, cover claims that come during the period of time that you carry the coverage. The following considerations should also be weighed:
- Is the coverage specialized for real estate, specifically?
- Does it cover everyone you have on staff? This could include other agents or temporary employees.
- Does it cover past work? There is a chance you won’t be able to find this in a coverage plan. However, some plans will include a clause that covers any business you may have conducted, up to an agreed upon date, before being insured by their plan.
- Is the coverage worldwide? This might not be applicable to you if you only buy and sell real estate in a specific area. However, if you do sell all over the world it would definitely behoove you to make sure you are covered everywhere.
- How quick are they to respond to claims? Read some reviews on the Internet and see what other professionals are saying about the company you are considering. The last thing you want is an insurance company who is hard to get a hold of and slow to respond.
Essentially, when you conduct business you are paving a future for yourself and your family, so it would be in your best interest to protect what you’ve worked hard to build. Everyone is bound to make a mistake from time to time, nobody is perfect.
Additionally, there are, unfortunately, dishonest people out there looking to make quick money through lawsuits. These are the types of things that E&O insurance ensures you will be protected against. Hopefully now you will understand why it is imperative to carry Errors and Omissions insurance as a real estate professional.
Disclaimer: The contents of this article and the linked materials do not offer legal, business, or insurance advice related to the needs of any specific individual business. Please consult your attorney, insurance agent or other professional advisor to obtain appropriate legal or other expert advice.
Kevin Kerridge is the Director of small business insurance at Hiscox, a global insurance company with 100+ years of experience.
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