Odds are that you don’t need every type of coverage that a real estate E&O insurance policy could include. For example, if you’re just getting started in real estate, you likely won’t need to buy extra Full Prior Acts coverage (because you haven’t closed any transactions or ‘prior acts’ if this is your first time in the business). And a real estate appraiser who doesn’t perform selling activities doesn’t need Open House and Showings liability coverage.
Getting the right types of coverage in your real estate E&O insurance policy is all about knowing what real estate activities or services you plan to perform, what your anticipated real estate client needs may be, and being realistic about the amounts of coverage you need. You should take advantage of the tailored coverages and services an E&O company that specializes in real estate can offer, including legal advisory services to help prevent E&O claims (not just cover them after the fact), and Seller’s E&O to help grow your business.
Here’s a simple list to help you get started on customizing your own real estate E&O insurance.
1. What Real Estate Activities Do You Currently Do or Plan to Perform
When deciding on the type and amount of E&O coverage you need, review the types of activities you’ve been involved in during the past 12 months, and what you expect to be involved with during the next 12 months. Those activities might include:
- Residential Sales
- Commercial Sales
- Residential Appraisals
- Escrow Brokering
- Mortgage Brokering
- Property Management
You’ll want to be sure to include each of these activities in your E&O quote.
2. What Specific Coverages Do You Need
You’ll also need to consider the specific coverage options available with many E&O policies. For real estate brokers and agents, coverage options may include:
- Open House and Showings coverage – covers you for bodily injury or property damage resulting from open house, showings and other selling activities
- Cyber Liability coverage – added coverage for damages resulting from data breach (vs. just client notification coverage, which is covered in a CRES E&O policy)
- Prior Acts coverage – covers all transactions as long as you have maintained insurance and is usually included in a real estate E&O insurance policy
- Full Prior Acts coverage – covers all prior transactions EVEN IF you didn’t have insurance at the time of the transaction. — A CRES EXCLUSIVE
- Conformity Endorsement – If you have a real estate license in another state that has a mandatory requirement for E&O insurance, Conformity Coverage allows the policy to conform to the insurance requirements of the other state.
- Environmental/Pollution coverage – Coverage for claims stemming from unknown pre-existing or new pollution conditions or environmental hazards such as lead, radon, mold, asbestos, etc.
3. Is There Access to Additional Services as Part of Your E&O
As you’re reviewing your real estate E&O insurance options, you’ll discover that some companies specializing in real estate E&O offer extras you won’t find elsewhere. For example:
- ClaimPrevent®Legal Advisory Services – access to on-call local expert real estate attorneys 7 days a week for questions, letters, contract review, and claim prevention support — A CRES EXCLUSIVE
- Seller’s Protection Plan – up to $25,000 in Seller’s E&O for your seller clients to help you close more listings — A CRES EXCLUSIVE
- Building Permit History Reports – claim-preventing property permit history reports to share with buyers before the close of sale. 25 included per year — A CRES EXCLUSIVE
- Qualified Home Warranties – CRES’ Qualified Home Warranties gives seller clients up to $50,000 in Seller’s E&O and benefits you by reducing your policy retention (out-of-pocket claims expense) in the event of a claim* — A CRES EXCLUSIVE
4. How Much Coverage Do You Need?
You’ll want to consider the overall coverage limits that you need. For example, if you are working with high-end properties, you may want greater E&O policy limits should a claim arise. This is because higher end properties come with larger price tags and greater financial risk. If you tend to work with a lot of older or historic homes, you may want more coverage should a claim arise as a result of the condition of the home (think big ticket items like plumbing, roofing, and foundations). If you do a lot of transactions during the year, that may mean more exposure to risks. Higher policy limits may give you more peace of mind.
If your state mandates that licensed real estate professionals have E&O insurance, you’ll find that CRES E&O policy limits EXCEED those limits offered by the state program. So with CRES, you’ll get more coverage for less cost than the state program.
With CRES, you choose your E&O policy limits, retention and the activities you need covered, so you only pay for what you need. That is why it’s so important to take the time to really consider how you serve your clients.
At CRES, we specialize in real estate E&O insurance. We offer not only the flexibility of customizable coverage options — we also include ClaimPrevent® legal advisory services to help you prevent claims from happening in the first place. Find out how we can help you. Get a customized quote today.
What have you done to assess your real estate E&O insurance needs to ensure you have the right coverage and services? Tell us in the comments below!
*The E&O Retention Reduction applies to any real estate licensed Real Estate Services Council Risk Purchasing Group, LLC. (“RESCRPG”) member who personally pays for the Home Warranty Plan. Seller’s E&O coverage and other benefits are feature based and warranty specific. These benefits are offered by, and intended for, the members of RESCRPG. Not available in all states. Certain restrictions apply.