There are so many facets in real estate transactions that can go awry, which is why there is so much potential for real estate agents to get sued. Some of the most common reasons are that their advice fails to meet a client’s expectations, or they fail to document certain decisions or actions, or perhaps the client believes they didn’t faithfully act in his or her best interests. Let’s face it; it only takes one real (or perceived) mistake to ignite a costly legal dispute.
Real estate agent insurance, and particularly professional liability coverage, will aid you when a dissatisfied client decides to engage in a liability lawsuit, and it serves as a way to protect your business and assets. Also known as errors and omissions (E&O) coverage, this insurance can provide a legal defense as well as pay for damages or settlements you may be ordered to pay, up to the limits of your policy.
How this policy works to your benefit
Another way this policy can help you is that it can also protect you against unexpected liability if your work or advice for a client causes damages to a third party. For example, suppose the agent fails to disclose to a buyer that a home they’re interested in purchasing has sustained major water damage. Months later, after the sale, the buyer is now stuck with having to pay for mold remediation and turns around and sues your company for damages. Even if you didn’t know the problem existed, you could still potentially be sued. This is exactly the type of situation where professional liability insurance will really come in handy.
As a real estate professional your time is generally consumed with work. You may even have begun offering related services, like property management, to help increase your income potential, which only further stretches your time and attention to some of the little details. Prevent your real estate business, and career as a real estate agent, from the danger of being harmed by a lawsuit by having liability insurance in place to make sure you’re properly protected.
Duty to defend
You should note that real estate agent insurance policies for E&O typically provide coverage on a claims-made basis. This means that for a claim to be covered, the incident in question must have occurred while the policy was in force, and the claim must also be reported to the carrier while the policy is still active. Speak to an agent with any questions pertaining to this important coverage.