Errors and Omissions Insurance for Real Estate

Errors and omissions insurance covers you when a client claims that something you did or failed to do caused them harm. It can apply to situations like missing a disclosure, misrepresenting details or overlooking a deadline. It typically pays for legal defense and settlement costs up to policy limits, minus your deductible, even if you're not at fault.

What you'll pay for E&O insurance depends on where you work, how much coverage you choose and whether you've had past claims. Actual premiums depend on multiple factors and require individual underwriting evaluation. Some agents pay less than others, especially if their risk is lower. You might also save by bundling policies or choosing an annual payment.

Yes. One example is failing to disclose property defects, like a cracked foundation. Another involves missed contract deadlines that lead to a lost sale. Even simple slip-ups can result in legal disputes, making E&O coverage necessary.

Eight states require real estate agents to carry E&O insurance: Colorado, Idaho, Iowa, Louisiana, Montana, Nebraska, South Dakota and Wyoming. Although coverage is optional in other states, it's smart to get it. Requirements can change, so it's always worth checking with your state licensing board.

E&O insurance helps when a mistake you make, such as a contract error or missed detail, leads to a client dispute. General liability applies if someone gets hurt or you damage property during a showing. Many real estate agents carry both since they protect against different types of risk.

Your premium depends on your business size, location, coverage limits, deductible and claims history. You'll likely pay less if you've got a clean record and lower-risk work. Bundling E&O with other policies also helps you save.

Your policy can include tail coverage (an extended reporting period). It allows you to stay protected for claims made after your policy ends, which is helpful if you retire, switch careers or take a break from the industry.