Comparing Real Estate E&O Policies: How to Choose the Right E&O for You
When you select a Real Estate Errors and Omissions policy, you’re selecting a partner to help protect the future of your business — and a policy to cover the specific risks you encounter in your job every day.
There are companies that offer a standard E&O policy across industries; but you typically won’t find coverage customized for your specific risks in those policies.
And with just about every E&O policy, the money you’ve invested in the policy doesn’t bring you any return — until you have a claim. (But that’s not true with CRES, as you’ll see below.)
We think real estate, appraisal, escrow, mortgage, property management, and transaction coordination professionals deserve more. Here are the key elements to look for when choosing E&O that is truly customized to protect your business.
Choosing the Right E&O Insurance Company
Nothing says more about the quality and standard of service of a business than the satisfaction of its clients. CRES has steadily grown since 1996, because of the value of our customized E&O policies that offer comprehensive and specific-to-real-estate coverage.
CRES has been chosen by over 100,000 real estate professionals to protect their business — including some of the largest firms in the US. Our E&O + ClaimPrevent® has also helped thousands of clients prevent issues from becoming claims, saving their business’s reputation and hundreds of thousands of dollars in attorney defense fees.
CRES focuses on lower-risk licensees who primarily perform residential real estate services. Because our risk is lower, we can keep your rates lower — and include more coverage and services you won’t get from other E&O firms.
E&O companies that take on higher-risk clients tend to have higher costs, so they have to charge more. (Most states that require real estate E&O coverage have contracted with E&O providers to accept everyone. Their risk is higher, their claims costs are higher, so their rates are higher.) That doesn’t equate to lower rates for lower-risk licensees like you.
For most licensees who primarily work in residential real estate, CRES offers much more extensive coverage — and usually for a lower cost than those carriers who have to take everyone.
CRES directly underwrites for our preferred A-rated (by A.M. Best) insurance carriers. This rating is “a comprehensive analysis consisting of a quantitative and qualitative evaluation of balance sheet strength, operating performance, and business profile.” A-rated insurance carriers are strong financially, and you don’t have to worry about losing your coverage to a carrier that might close up shop overnight. (Learn more at www.ambest.com).
CRES operates as a Managing General Agent for our preferred insurance carriers. That means we handle our own underwriting and approval of your policy, and provide on-going policy service whenever you need us.
If our preferred programs aren’t the best option, we’ll do the shopping for you, from programs most other brokers just can’t offer. As part of Arthur J. Gallagher, one of the largest insurance brokers in the world, CRES has unequaled access to product options, to find you the best protection at the best price.
If your state requires individual E&O insurance, your state has contracted with a provider who must take all applicants who apply. That provider has to cover the highest-risk individuals. That’s typically why premiums charged by your state program tend to be higher, and in some cases, much higher, than CRES premiums.
CRES works primarily with those working in residential real estate (appraisal, escrow, mortgage brokerage, property management, real estate sales, or transaction coordination), who tend to be lower risk. And we focus on claim prevention — because that helps keep your life stress-free, and it helps us keep your rates low. That’s why we offer our ClaimPrevent® Legal Hotline 7 days a week to answer questions, review contracts, and write letters. It’s also why we’ve created our Building Permit History Reports (25 free per year), our Seller’s E&O Protection Plan, and our Qualified Home Warranties — all designed to help you prevent claims.
If you wanted a specific make of car, wouldn’t you go to that dealership (the expert), rather than Bob’s mixed auto lot? Be sure you buy the most important protection your business needs from a company that specializes in real estate E&O.
When a company specializes in real estate E&O, they bring critical knowledge of your business risks to the design of your E&O policy. That can make the difference between helping you prevent claims and providing comprehensive coverage — to leaving you and your business exposed unnecessarily.
CRES specializes only in Real Estate E&O — and has for more than 25 years. From the day we were founded, we’ve had 100% of our focus on protecting real estate licensees, firms and other real estate industry specialists you work with every day (including appraisers, escrow companies, mortgage brokers, property management companies, and transaction coordinators). CRES has designed innovative coverage — as well as highly-unique tools specific to your daily activities — like:
- ClaimPrevent® Legal Advice Service (or our “stress-less Hotline”) — you’ll have on-call access to our team of local real estate litigation attorneys, who can help you review contracts, write letters, answer questions, and resolve issues early before they turn into claims. (Your E&O investment starts working for you on day one — something few other insurance companies can say.)
- Open House and Showings coverage — to cover you for bodily injury or property damage that occurs during these common selling activities. Can you believe that most E&O companies try to sell E&O to real estate licensees and firms without this?
- Free Building Permit History Reports — you can reduce your E&O retention (out-of-pocket claims expense)* and your claims liability when you share Reports with buyers before close of sale. CRES real estate E&O + ClaimPrevent® policies come with at least 25 free Building Permit History Reports (a $99.95 value) and discount pricing on additional reports. With 1 in 5 claims resulting from permit issues, showing buyers the presence or absence of permits can help reduce your liability and E&O claims.
- Seller’s E&O — You’ll attract more listings by offering $25,000 in Seller’s E&O coverage to protect your clients for 180 days after closing.
- Qualified Home Warranties — increase your Seller’s E&O by up to $50,000, while reducing your own E&O retention (out-of-pocket claims expense)* and claims liability risk. Policies up to 13 months offer a unique structural coverage option.
Be careful of “miscellaneous” E&O policies which can lead to potentially dangerous coverage gaps. General E&O or liability insurance companies or brokers may offer you their standard E&O policy. Make sure the company you choose offers E&O designed to address the risks specific to what you do every day.
What to Look for in a Real Estate E&O Policy
Does the real estate E&O policy help me grow my business and get more listings (if you're in real estate sales)?
CRES Seller’s Protection Plan protects your sellers after the sale by providing them with at least $25,000 of their own Seller’s E&O coverage, a value-added benefit that can get you more listings! (Or your escrow company can offer Seller’s E&O as a seller benefit for choosing your company.) Imagine being able to mention this in your ads and flyers to attract clients. Imagine being able to include this in every listing proposal!
Seller’s E&O will give you an incredible competitive advantage that most other brokers, agents, and escrow companies just can’t offer.
Depending on your state, Seller’s E&O may be a low-cost option with your CRES E&O policy, or it may be automatically included. See the E&O details for your state.
CRES uniquely includes ClaimPrevent® Legal Advisory Services with your real estate E&O policy, giving you daily on-call access to a team of local attorneys.
This team of expert real estate litigators, available 7 days week, will help you proactively resolve issues before they turn into big problems. That means you enjoy a DAILY benefit from your CRES E&O policy. A CRES Innovation!
Ask questions, have them write letters, review contracts, create addendums. They are your first line of defense whenever you have a potential issue with a client. They’ll walk you through what to do to help diffuse the situation.
ClaimPrevent® Services are included with EVERY CRES E&O policy. We were the first real estate E&O company to include Legal Services over 20 years ago. Read what our customers say! You’ll see the word “responsive” over and over in these customer comments.
Shouldn’t you get more from your real estate E&O investment? Shouldn’t you also have Legal Services 7 days a week included?
CRES real estate E&O + ClaimPrevent® insurance policies can cover all real estate activities requiring a license, including commercial sales or land sales. If you’ve been involved in Commercial real estate activities over the last 12 months, or plan to be during the coming 12 months, you can include commercial coverage in a CRES policy.
If you’re in real estate sales, you need a policy that includes Lock Box coverage for both property damage and bodily injury related to your lockbox.
CRES real estate E&O + ClaimPrevent® policies include Lock Box coverage, typically up to your policy limits.
Beware of generic E&O policies that are used across multiple industries. They may have dangerous gaps in coverage, if they’re not customized for your particular real estate risks.
With CRES E&O, you can customize your policy to cover the issues you encounter on a daily basis in real estate, including:
- Open House and Showings coverage
- Fair Housing/Discrimination coverage
- Pollution/Mold/Environmental coverage
- and more
To customize your real estate E&O policy, choose your state and main activity and get a quote.
Depending on the coverage offered in your state, most CRES real estate E&O + ClaimPrevent® policies offer Agent-Owned Property coverage. That covers transactions where you as the agent are involved in listing and selling residential properties owned by relatives. Single family residences up to a fourplex are included in the coverage.
Many E&O companies do not cover these transactions. If they do offer coverage, they may only cover Agent-Owned Properties that are your primary residence.
Does the real estate E&O policy cover all types of properties, including ones in which I have an ownership?
Most CRES real estate E&O + ClaimPrevent® policies include coverage related to all types of properties.(See the coverages available in your state.)
Many other companies will only cover “primary residence” agent-owned property transactions. Most CRES policies cover residential transactions involving single family residences up to fourplexes in which the licensee has an ownership interest or investment.
CRES includes Prior Acts coverage as a standard feature to cover past transactions, as long as you’ve had continuous E&O insurance coverage with us or any insurance company.
If general, if you had coverage under a firm’s policy, and you changed firms, you would need to have an individual E&O policy in place before you made the change to ensure continuous coverage.
Your policy limits are typically state-specific. As an example, you may see policy limits shown as $100,000/$500,000.
Policy limits determine how much coverage you will receive for each claim (the per-claim limit, which is the first number) and the maximum total the company will cover for all claims paid out within a policy period (aggregate limit, the second number). When comparing policies, it’s important to ensure you’re comparing the same coverage limits.
You can customize your E&O policy to include higher coverage limits if your business sales activity suggests you should have them. Our real estate E&O specialists can help you determine what limits are best for you.
Depending on your state and type of policy, you may be able to customize your E&O policy to include:
Open House/Showings Coverage (may be standard or a low-cost option in your state)
Other companies often only cover injuries at your office. CRES’ Open House and Showings coverage extends coverage to third-party injury and property damage that may occur during open houses, showings or other selling activities — including from your real estate signage. Also called Contingent Liability.
Seller’s E&O Protection Plan (may be standard or a low-cost option in your state)
With Seller’s E&O, your sellers have up to $25,000 in protection from disgruntled buyers for 180 days from close of escrow, and it can be extended for an additional 180 days. Uninsured sellers who are sued by buyers often respond by suing their real estate agent. But when they’re protected by our Seller’s E&O, that risk is reduced and often eliminated. Claims against Seller’s E&O do not affect your policy or premium.
Plus, the more CRES products you use, the higher the coverage levels. For example, with a CRES Qualified Home Warranty, you can increase the seller’s E&O coverage by up to $50,000 (in states where available). Whether used alone or paired with a CRES Qualified Home Warranty, Seller’s E&O gives you a competitive advantage to help you close more listings!
Pollution/Environmental/Mold Coverage (may be standard or optional in your state)
Hidden dangers can occur, especially on older real estate properties. Others offer no, or limited, optional coverage. CRES offers higher pollution coverage limits and includes mold and fungi (typically excluded by other companies) when you add this option.
Fair Housing/Discrimination Coverage (coverage for defense only or defense and damages)
This covers you up to your policy limits for any claim involving discrimination.
Defense Outside the Limits (may be standard or optional in your state)
This coverage provides a separate limit for attorney’s fees usually equal to your policy limit (which basically doubles the value of your policy).
This endorsement amends your real estate E&O policy, purchased in the state where you hold and conduct your primary licensed business, to also conform to E&O requirements of other states where you hold a valid real estate license. If you conduct licensed real estate transactions in more than one state, this coverage eliminates the need to buy a separate policy in each of those states.
CFPB (Consumer Financial Protection Bureau) Investigations
This optional coverage protects you should you be involved in a CFPB investigation.
CRES Qualified Home Warranties
We’ve partnered with the leading home warranty companies to provide you and your clients with expanded benefits that aren’t available anywhere else, like optional Structural Coverage. You reduce your E&O retention (out-of-pocket claims expense) up to $2,500* and your clients get up to $50,000 in Seller’s E&O when they buy a CRES Qualified Home Warranty from one of our partners (in states where available).*
Purchasing a Home Warranty for your sellers can make your listings more attractive, and sell faster and for more money. Give your buyer a Building Permit History Report (below) before closing and reduce your retention another $2,500*.
CRES Building Permit History Reports
Nearly 1 in 5 E&O claims are related to permit issues. Our Building Permit History Reports can reduce your retention* (out-of-pocket claims expense) up to $2,500 and your claims liability when you share a Report with buyers before closing. You’ll receive 25 free reports (a $99.95 value) each year as a member with CRES.
* Inclusions can vary by state or policy type. Read each policy for a full comparison of coverage and benefits. All coverage is subject to Underwriting and other qualifications. Seller’s E&O coverage and other benefits are feature-based and warranty specific. The E&O Retention (Out-of-Pocket Claims Expense) 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. These benefits are offered by, and intended for, the members of RESCRPG. RESCRPG membership is part of your CRES E&O policy. Other warranties may also qualify for an E&O Retention Reduction, but only those warranties listed here are guaranteed to qualify. Not available in all states. Certain restrictions apply. Read each policy for a full comparison of coverage and benefits. All coverage is subject to Underwriting and other qualifications.