As a realtor, you do everything you can to find the perfect property for your clients. While you may have a passing familiarity with errors and omissions insurance, do you know how it could help defend your professional license?
Chron takes a deep dive into errors and omissions coverage for real estate brokers. Understand how the right policy could help keep you out of legal hot water.
The basics
If you face monetary legal action because of an omission or error, your errors and omissions policy covers you. For instance, you could file the wrong documents and put a house in foreclosure without a valid reason. Should someone sue you for your error, your insurance coverage would take care of the plaintiff’s damages and the price of working with a legal advocate. Errors and omissions policies have their limits. For example, they do not help with intentional misconduct, such as mortgage fraud.
Deductible and price
Think carefully about your policy’s deductible, as it represents how much you must pay for your legal damages and litigation costs before your policy activates. Much like with auto insurance, the higher the deductible you pay, the more you reduce your coverage premiums.
Coverage level and price
Another limitation of this insurance is it does not take care of all damage and lawsuit costs. When you buy a policy, you must select a coverage level. If legal damages spill over your coverage level, you must pay the rest out of your pocket. While you may prefer as much coverage as possible to be on the safe side, choosing a high coverage level results in more out-of-pocket spending.
Think carefully about which errors and omissions policy you choose. Your decision could affect the rest of your career.