Errors and Omissions Insurance Protection
Just as a doctor should have medical malpractice insurance, a real estate agent should have errors and omissions insurance. This insurance protects you against a lawsuit if you inadvertently make a mistake. The operative word here is inadvertently. If you purposely commit fraud or negligence, your insurance company may not cover you.
It is important to add your real estate office to your automobile insurance policy as an additional insured. If you are in an accident with a client or customer in the car, you and your office can be held liable for any injuries that person sustains.
Some clients will file a lawsuit against you in hopes of receiving money for the damages they believe you caused. Even if you make no mistakes on the job, there are always people who attempt to sue others for invalid or frivolous reasons. The fact is, everyone makes a mistake some time during his career. No matter who wins in court, your legal expenses must be paid. E&O insurance can help.
Common E&O coverage includes claims that result from errors, omissions, or negligence during your work as a real estate agent. Exclusions (things the insurance company will not pay for) usually include:
Claims that result from dishonesty or when you've committed a criminal act
Claims regarding your knowledge of pollution on a property
Claims against you if you injure or kill someone
Claims against you when you've damaged a property
Like your auto and homeowners insurance, E&O policies have a deductible — a specified amount you must pay before the insurance coverage kicks in. Some E&O policies have two deductibles, one for defense costs and one for damages.
You should ask your insurance agent to check your auto liability coverage. You probably need to increase your coverage now that you're an agent who transports people on a regular basis. Your insurance agent might need to put you into a different category for that coverage.
Your real estate firm might have an E&O policy that protects its agents. Ask your broker-in-charge for that information, then take the details to your own insurance professional to make sure the coverage is adequate for your needs. If your insurance agent doesn't handle that type of coverage, ask for a referral to a company that does.