Errors and Omissions insurance is a part of complex liability insurance. Real estate agents, brokers, and other types of advisors need to have it to prevent lawsuits for circumstances that might arise during their business’s normal operation.
What Does It Cover?
This insurance covers real estate agents and brokerages in the event of:
- Accidental errors
- Accidental omissions
- Reporting and document errors
It works very similar to malpractice insurance. The thought behind errors and omissions insurance for realtors is that mistakes can and do happen. Although the real estate agent made a mistake, the insurance covers the cost of that mistake in the event of a claim or lawsuit. It often covers lawyer’s fees, court fees, and damages to the buyer or seller.
What Doesn’t It Cover?
This insurance does not cover criminal acts, dishonest acts, or polluted or contaminated real property. It also doesn’t cover an agent that hurts or kills someone due to negligence or damages another person’s property. The policy may have a criminal negligence clause that states that it does not cover any criminal behavior or damages that result in criminal charges.
This type of insurance acts as liability insurance. A buyer or seller can take the agent or brokerage to court, and if they win, the insurance covers the cost of the claim and any other fees incurred.