Skip to content
Woman with hand raised asking question

Your Real Estate E&O Insurance Q and A

Real estate Errors and Omissions insurance and claims prevention doesn’t have to be complicated or scary.

We’ve compiled the most common questions about real estate E&O insurance and claims prevention — and the answers. Here we go:

Q: What are the most common claims made against real estate agents?

A: The Top 11 are:

  • Fraud: A broad category that can include lying or holding back information from the client
  • Breach of duty: When buyers or sellers claim the real estate agent didn’t act in their best interest
  • Breach of contract: When the buyer or seller claims the real estate agent didn’t do everything in the contract
  • Negligence: When the client claims the real estate agent’s inaction caused harm
  • Open house and showings damage: In the case of property damage or injury
  • Misrepresentation regarding the condition of the property: For example, the buyer claims that the real estate agent said the property was up to code, but it actually wasn’t
  • Consumer Protection Act: Laws that govern the protection of consumers against  unfair, deceptive and fraudulent business practices
  • Earnest /escrow money dispute: Whenever funds don’t go where they should, when they should
  • Misrepresentation regarding flooding or leaks: When the buyers claim the real estate agent knew about flooding or leaks and didn’t tell them
  • Misrepresentation regarding the value of the property: Whenever the buyers or sellers say that the real estate agent gave them an incorrect value of the property
  • Breach of fiduciary duty: This can be the mishandling of funds

Q: What are the riskiest areas of real estate that result in the most E&O claims?

A:  Four areas of real estate work that create the most claims are:

  • Appraisals
  • Mortgage Brokering
  • Property Management
  • Agent Owned Properties

Q: What is RESPA?

A: It’s the Real Estate Settlement Procedures Act of 1974. And yes, you need to know about it. Read more here.

Q: What does ‘Open House and Showings’ protection cover?

A: This is coverage for any injuries to third parties or damages that occur during open house, showings, or other selling activities (including as a result of your real estate signage). Think of it as extra protection for when dogs bite, people slip, or things break. Most companies charge high extra fees for this coverage. CRES includes it as standard on many policies, or offers it as an option for just a few dollars a year.

Q: What does Seller’s E&O do? Why don’t I see it offered by other providers?

A: CRES is known for adding innovative protection to its flagship E&O product. Seller’s E&O provides your sellers with $25,000 in E&O coverage to protect them up to 180 days after the sale. CRES clients use this as a competitive advantage to attract potential listings. CRES members can double the Seller’s E&O to $50,000 and reduce their own retention (out-of-pocket claims expense)* by purchasing a CRES Qualified Home Warranty product (in states where available) for the sellers or buyers!

Q: Do Building Permit History Reports really help prevent claims?

A: Yes. One in five claims is related to permit issues. CRES believes in using Building Permit History Reports so strongly that we include 25 free reports per year with every policy.

Q: What does ‘Legal Services for Risk Management’ mean?

A:  You have on-call local attorneys available to you pre-claim at no extra cost. They help you when you have a question, need a letter written, or a contract reviewed. Anytime there’s even a possibility of a claim situation occurring, you can call them to advise you and help prevent claims. CRES’ focus on claim prevention is unique in the industry.

Q: Why is CRES Insurance more affordable than other real estate E&O insurance?

A: CRES focuses on lower risk licensees who primarily perform residential real estate services. Because our risk is lower, we can keep our costs low and include more coverage and services. We also focus on claim prevention and include services to help members prevent issues from becoming claims — again keeping costs low for CRES clients.

Q: What is ‘Prior Acts’ overage?

A:  Prior Acts covers all transactions for as long as you’ve maintained continuous real estate E&O insurance.

Q: Why do Agent-Owned Property (AOP) transactions result in so many claims? And does my real estate E&O insurance cover my properties or just my residence?

A:  Instead of receiving a commission based on a percentage of the sale price, an agent selling a property he/she owns is receiving the full value of a home. So there’s more to gain by withholding information regarding the condition of a property the agent owns. Agent Owned Property (AOP) coverage covers an agent’s primary residence or, depending on the policy, other residential property where the agent holds an ownership interest. Unlike CRES, many E&O insurance companies only offer coverage for an agent’s primary residence, leaving the agent without full AOP coverage. AOP transactions can get complicated, making CRES Pre-Claim Legal Services  all that more vital to avoid a claim. Learn more about AOPs.

Q: What is the average cost for defense related to a real estate E&O claim?

A: Attorney fees alone can easily amount to at least $10,000, and attorney costs of $100,000 or more are not unheard of in complex cases.

Q: Can I qualify for CRES Real Estate E&O insurance even if I’ve had a past claim?

A: Yes. CRES is more concerned about whether you met your standard of care, than how much was paid on a claim. So if you did everything correctly, your premium may stay the same after a claim.

Q: How do I get a quote for CRES insurance?

A: Click here to find your solution and get a quote.

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.

Back To Top