Errors and Omissions Insurance for Real Estate (A 2025 Guide)

Updated: September 10, 2025

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Key Takeaways

Errors and omissions insurance in real estate covers professional mistakes like missed disclosures, pricing errors or paperwork delays.

States like Colorado, Louisiana and Montana require E&O insurance for real estate professionals to maintain an active license.

Real estate agents often need general liability, cyber coverage and commercial auto insurance in addition to E&O.

How Does Errors and Omissions Insurance Work for Real Estate?

Real estate professionals handle complex transactions with multiple moving parts, but even experienced agents face claims over professional mistakes. E&O insurance for real estate agents covers professional mistakes like missed disclosure requirements, property valuation errors or contract oversights.

Unlike general liability, which covers bodily injury, E&O insurance for real estate agents covers costs from lawsuits claiming your professional advice caused clients financial harm. E&O policies include legal defense plus damages up to your policy limits.

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What Does Errors and Omissions Insurance Cover in Real Estate?

Real estate E&O insurance covers professional negligence claims, but excludes intentional wrongdoing and criminal acts. Review covered services to determine if the policy matches your business operations.


You know about a problem with a house but don't tell the buyer.	✅	A buyer sues for $45,000 after discovering foundation cracks you knew about but didn't mention when selling the home.
You deliberately lie to clients or commit fraud.	❌	Intentionally hiding known structural damage or creating fake documents isn't covered because it's deliberate wrongdoing.
You tell clients their house is worth more or less than it actually is.	✅	Your price estimate is $30,000 too high, so the lender denies the buyer's mortgage application and triggers a lawsuit.
Someone gets physically hurt during a house showing or inspection.	❌	A client breaks their ankle falling down stairs during a showing because physical injuries require general liability insurance.
You miss an important deadline when buying or selling a house.	✅	You forgot to submit inspection paperwork on time, which cost your buyer their $15,000 deposit and sparked a lawsuit.
You promise clients their house will definitely increase in value.	❌	Guaranteeing a home will appreciate 10% annually isn't covered because you're making specific promises about future profits.
You put the wrong information in house listings or advertisements.	✅	You list a house as 2,500 square feet when it's actually 2,200, leading to a $12,000 claim from disappointed buyers.
You refuse to work with certain clients based on race, religion or other protected characteristics.	❌	Discrimination in housing requires separate employment practices liability insurance, not errors and omissions coverage.
You're a real estate broker and your agent makes mistakes you should have caught.	✅	Your agent fails to disclose problems on several home sales, resulting in $85,000 worth of lawsuits against your brokerage.
You steal money from clients or misuse funds they gave you.	❌	You used a client's $20,000 earnest money deposit to pay personal bills and couldn't return it at closing. They filed a $35,000 lawsuit for the failed transaction and damages.

LEARN MORE ABOUT ERRORS & OMISSIONS (E&O) INSURANCE

Ready to find the right errors and omissions insurance for real estate? These guides help you compare costs, find affordable options and choose the best coverage.

Who Needs Errors and Omissions Insurance in Real Estate?

Real estate agents, regardless of experience level, face potential liability in every transaction. Although most states don't legally require E&O insurance, coverage protects agents from costly professional liability claims. Coverage needs depend on the agent's role and transaction complexity.

The following real estate professionals should consider E&O coverage:

Real Estate Agents and Sales Associates

Handles buyer and seller transactions, property showings and contract negotiations where disclosure mistakes can lead to expensive lawsuits from disappointed clients.

Real Estate Brokers and Broker-Owners

Faces additional responsibility for supervising agents, plus liability for brokerage operations and multiple transactions happening simultaneously, increasing risk.

Commercial Real Estate Professionals

Works with high-value properties and complex deals where even small mistakes can result in six-figure claims and lengthy business disputes.

Property Appraisers and Evaluators

Provides price estimates that directly impact lending decisions. Pricing errors can cost clients tens of thousands when deals don't go through.

Property Managers and Leasing Agents

Handles tenant relations, maintenance decisions and lease agreements where housing problems or discrimination claims can surface unexpectedly.

Real Estate Inspectors

Examines properties for problems. Missing serious defects can lead to safety hazards and expensive repair bills for unsuspecting new homeowners.

Mortgage Brokers and Loan Officers

Processes financing applications where documentation or qualification errors can derail transactions and leave clients scrambling for alternatives.

State Requirements for Real Estate Errors and Omissions Insurance

These eight states require real estate professionals to carry E&O coverage to get or keep their license:


Colorado	E&O insurance required for every active real estate professional (specific limits in Commission Rule 3.9)
Idaho	Individual brokers and business entities must have E&O insurance
Iowa	Continuous E&O coverage required for brokers, salespersons, corporations, LLCs and partnerships
Louisiana	$100,000 per claim / $300,000 aggregate coverage required
Montana	$100,000 per claim / $300,000 aggregate for individuals; $100,000 per claim / $1 million aggregate for firms
Nebraska	$100,000 per occurrence, $300,000 annual aggregate minimum
South Dakota	Coverage required for brokers, associates, property managers, auctioneers and sales agents
Wyoming	Proof of E&O coverage required for all licensed professionals

Disclaimer

State insurance requirements change frequently and vary by jurisdiction. This information is for general guidance only and shouldn't be considered legal advice. Always verify current requirements with your state's real estate commission or licensing board before making coverage decisions.

If your license is in one of these states, you must maintain continuous coverage or face license suspension. Most states requiring E&O insurance offer group plans through their real estate commissions. You can also buy coverage from any insurance company as long as it meets your state's minimum requirements.

Is Errors and Omissions Insurance for Real Estate Enough?

E&O insurance handles professional mistakes, but real estate agents deal with many other hazards that need different protection. Say a client trips during a house tour, or someone claims your listing photos violated their copyright — E&O won't help with those situations.

Here's what else you should consider:

General Liability Insurance

Accidents happen during showings, like clients tripping over equipment or you damaging someone's floors while staging. It covers injury costs and damage expenses that fall outside E&O protection.

Commercial Property Insurance

Your laptop with all those client files, professional camera for listing photos and office furniture need protection from theft or fire damage.

Cyber Liability Insurance

Real estate deals involve Social Security numbers, bank account details and financial records. Cyber coverage helps pay for credit monitoring, legal fees and regulatory fines when hackers target this information.

Business Interruption Insurance

A burst pipe floods your office, or a kitchen fire forces you to close temporarily. Business interruption coverage replaces your lost income and helps pay rent while you get back on your feet.

Commercial Auto Insurance

Personal car insurance often won't cover accidents while driving clients to showings or delivering contracts. You need business coverage for work-related driving.

Employment Practices Liability Insurance

Once you hire assistants or other agents, employment practices coverage protects you from discrimination lawsuits, harassment claims or wrongful termination suits from current and former employees.

Insurers usually sell errors and omissions policies independently, but you can add them to a business owner's policy to save on cost.

Errors and Omissions for Real Estate Insurance: Bottom Line

Mistakes happen in real estate, and that's exactly what errors and omissions insurance is for. Some states make it a must, but it's worth having even if yours doesn't. For full financial protection, think beyond E&O and consider adding coverage like general liability, cyber liability and commercial auto.

Real Estate Errors and Omissions Insurance: FAQ

We've addressed frequently asked questions about errors and omissions insurance for real estate to help you understand how it works and why it matters:

What does errors and omissions insurance cover in real estate?

E&O insurance covers you when clients claim your professional actions caused them financial harm. This includes missing disclosures, contract errors or deadline oversights. The policy pays for legal defense and settlements up to your coverage limits.

Legal defense costs are typically covered in addition to policy limits, while settlements are subject to your deductible.

How much is errors and omissions insurance for real estate agents?

Costs depend on your coverage amount, location, business size and claims history. Annual premiums vary based on risk factors. You can reduce costs by bundling with other policies or paying annually instead of monthly.

Can you show real examples of E&O claims in real estate?

Common claims include failing to disclose foundation problems, missing contract deadlines that kill deals, and property valuation errors. Even minor oversights can trigger expensive lawsuits.

Which states require E&O insurance for real estate agents?

Eight states mandate E&O coverage: Colorado, Idaho, Iowa, Louisiana, Montana, Nebraska, South Dakota and Wyoming. Other states make it optional, but coverage protects against costly litigation regardless of requirements.

What's the difference between E&O insurance and general liability for real estate?

E&O covers professional mistakes like contract errors or missed disclosures. General liability covers physical accidents during showings or property damage you cause. Most agents need both types of protection.

What factors affect E&O insurance costs for real estate agents?

Premiums depend on coverage limits, deductible, claims history, business size and location. Clean records and lower-risk work mean lower premiums.

Does E&O insurance cover claims made after you retire or leave the real estate industry?

You can buy tail coverage to protect yourself from claims filed after your policy expires. This extended reporting period is essential if you retire, change careers or take a break from real estate.

About Mark Fitzpatrick

Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like CNBC, NBC News and Mashable.

Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!

Passionate about economics and insurance, he aims to promote transparency in financial topics and empower others to make confident money decisions.

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sources

Colorado Division of Real Estate. "Broker Insurance Requirements." Accessed September 22, 2025.
Idaho State Legislature. "Section 54-2016 – Idaho State Legislature." Accessed September 22, 2025.
Iowa Department of Inspections, Appeals, & Licensing. "Errors and Omission Insurance." Accessed September 22, 2025.
Louisiana Real Estate Commission. "Errors and Omissions." Accessed September 22, 2025.
Montana State Legislature. "37-51-325. Professional Liability Insurance Required." Accessed September 22, 2025.
Nebraska Real Estate Commission. "Errors and Omissions Insurance Fact Sheet." Accessed September 22, 2025.
South Dakota Real Estate Commission. "Errors and Omissions Insurance." Accessed September 22, 2025.
Wyoming Real Estate Commission. "Rules and Regulations." Accessed September 22, 2025.