Real Estate E&O Coverage for Prior Transactions: What Are My Options?

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Never heard of Full Prior Acts or didn’t know there was a difference in Prior Acts coverage? You might wonder if one covers you for transactions that occurred in the past, why doesn’t the other? Are there exclusions? Here are the important differences you need to know between Prior Acts coverage and Full Prior Acts coverage under your real estate E&O policy.

Prior Acts coverage, sometimes called Retroactive coverage, covers all transactions as long as you have maintained continuous E&O insurance, and is usually included in a real estate E&O insurance policy. This is usually represented by a date on your Policy Declarations page (ie. September 1, 2009). This means there is only coverage from that date going forward. It is listed on your Declarations Page so coverage will continue from that date even if you switched insurance firms.

As long as there was no lapse or gap in insurance coverage between one policy to the next, then your basic Prior Acts coverage will cover you. Be careful though, as some lower cost policies will not include Prior Acts, so you will be responsible for paying claims for transactions prior to the start date of these inferior policies.

However, if you have had gaps in your coverage—times when you conducted business with no insurance whatsoever—Full Prior Acts coverage is what is needed to cover past transactions. This is especially important to consider if you’ve switched real estate firms, and may have been covered under your firm’s policy in the past. When you switched to the new firm, did you have your new E&O coverage in place on day one?  (This is just one reason to always have individual real estate E&O — it covers the gaps that might not even occur to you.) Also, if you have acquired/merged with other firms that started before yours, you may want to cover all prior transactions for both firms.

Full Prior Acts coverage covers all prior transactions if you’ve had gaps in coverage and EVEN IF you didn’t have insurance at the time of the transaction. So if you had a transaction that occurred during a time when you didn’t have real estate E&O insurance, having a current policy with Full Prior Acts coverage would cover that transaction if a claim arises.

CRES is the only company that offers Full Prior Acts coverage. It is available when you need real estate E&O insurance coverage on all past transactions and activity even if you have gaps or no past coverage. This is CRES’ exclusive solution to an industry-wide challenge to help keep you from losing this all-important protection.

Any real estate professional who has conducted transactions without insurance should purchase CRES’ Full Prior Acts coverage, as claims happen even years after a transaction occurred. Coverage is subject to Underwriting and other qualifications. Learn more here.

Have you benefited from Prior Acts or Full Prior Acts coverage in the past? Tell us about it in the comments below.

This blog/website is made available by CRES Insurance Services for educational purposes to give you general information and understanding of legal risks and insurance options, not to provide specific legal advice. This blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. Claims examples are for illustrative purposes only. Read your policy for a complete description of what is covered and excluded.

Originally Published November 23, 2016

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