Yes. Yes. Yes.
When someone offers professional advice or services, there are risks and liabilities involved. In order to mitigate the potential damages that can arise, these professionals need personal liability insurance, better known as errors and omissions coverage (E&O;).
With the current economic situation, many real estate professionals may be tempted to eliminate or reduce their E&O; coverage; make whatever cuts you need to make, but do not drop your E&O; coverage.
Real estate agents represent clients that may bring about a lawsuit as a result of the services rendered (or not rendered--negligence); therefore, these agents need liability insurance that protects them in case of a lawsuit. Many real estate agents believe that if they perform their jobs to perfection that they will avoid such lawsuits; however, that is not the case. Believe it or not, many lawsuits are unfounded but still can cost a real estate agent a tremendous amount of money in costs. This is where E&O; coverage can help protect the agent.
Although the specifics of your E&O; policy will vary depending upon your policy provider, the coverage is designed to protect real estate agents from lawsuits against the agent. However, there are some situations that are not covered by any E&O; policy including unethical/criminal actions taken by the real estate agent. As a result, if you have E&O; coverage you are protected from a vast majority of lawsuits (up to your specific policy); however, you must still uphold ethical standards and obey the law.
As a real estate agent you can get claims ranging from misrepresentation to your client being dissatisfied with how you marketed your property. Although these situations may sound minimal, the costs definitely add up quickly; therefore, the small upfront cost of E&O; coverage is definitely your best bet in the long run.
When you do decide to purchase E&O; policy, make sure to read the fine print and ensure that the policy that you are considering meets your needs. Make sure you ask the right questions and find out if the policy (and the company offering the policy) will cover claims that could be filed against you now and in the future.
In conclusion, every real estate agent or broker should have E&O; coverage to protect them against personal liability claims and possible lawsuits. If you need to cut costs due to the harsh economic conditions look elsewhere, but leave your E&O; coverage active.
For over 10 years, John Evan Miller has provided exceptional information on the foreclosure market.
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