Comparing Real Estate E&O Policies: How to Choose the Right E&O for You
When you select a Real Estate E&O 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 real estate activities 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, mortgage, and property management professionals deserve more. Here are the key elements to look for when choosing E&O that is truly customized for your business.
Choosing the Right E&O Insurance Company
Will your E&O insurance company understand how to best protect you and your business? Look at the specific-to-real-estate coverages they offer, their experience in your specific industry, their industry rating, and their adherence to your state’s particular regulations. (“What?” you may say. “Doesn’t every insurance company have to pay attention to my state’s laws?” Read on . . .)
Choosing the Right E&O Insurance Company
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. But few other industries have lockboxes, leasing and property management, REOs and short sales, and other activities unique to real estate. Make sure the company you choose offers E&O designed to address the risks specific to what you do every day.
CRES E&O policies are specifically designed to cover Real Estate transactions – with coverage for lockboxes, residential leasing and property management, REOs and Short Sales – as well as:
- Megan’s Law
- Agent-owned property
- Prior Acts coverage
- Disciplinary Hearings
- Data Breach Notification
- Open House and Showings
- Commercial Real Estate activities
See the “What’s Included” and “CRES Extras” sections below for more information.
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 20 years. From the day we were founded, we’ve had 100% of our focus on protecting real estate agents, firms and other real estate industry specialists you work with every day. 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 agents 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.
- Qualified Home Warranties – you can 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.
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 residential real estate licensees 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, and our Qualified Home Warranties – all designed to help you prevent claims.
Our focus on claim prevention also allows us to include many coverage options customized for real estate as standard in our policies — without charging higher premiums. Other companies may charge extra fees or higher premiums to add specific-to-real-estate coverages — if they offer the coverage at all.
CRES directly underwrites only for A-rated (by A.M. Best) insurance carriers (QBE Insurance and Plaza Indemnity). 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.
Make sure the company is “Admitted” in your state, meaning they are approved by the state’s insurance department. Admitted companies must abide by the state’s insurance regulations, and will file their rates, rules, and forms with the state. The state will step in to back up claims if the insurance company fails (a safety net of sorts). Here’s a hint: if you have to pay a “State Tax” or “Stamp Fee”, the company is probably not Admitted.
Beware of non-admitted companies trying to sell E&O in your state. Because non-admitted companies don’t file their rates, rules and forms with each state, they can change rates or coverage whenever they want.
CRES Insurance operates as a Managing General Agent. In each state where we offer real estate E&O policies, we underwrite only for carriers that are licensed and admitted by the state’s real estate department. We don’t charge state tax or stamp fees, and you can rest easy knowing you’re with a company that complies with all state insurance regulations.
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 increase the overall risk of claims company-wide resulting in increased company costs to cover those claims. (Most state E&O programs have to take everyone, so their costs and rates are higher.) That doesn’t equate to lower rates for lower-risk licensees like you.
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.
What to Look for in a Real Estate E&O Policy
Your policy limits are typically state-specific. As an example, you may see CRES policy limits shown as $500,000/$500,000 in many states.
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.
CRES real estate E&O + ClaimPrevent™ policies come standard with high coverage limits — often double that of other insurance companies, but without charging you more. We also offer you the ability to 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.
CRES E&O can also provide a separate limit for legal defense costs, equal to your aggregate policy limit. This means that your claim damages coverage limit is separate from your defense costs coverage limit, so they don’t share and reduce overall funds available for one or the other. (See the details for your state.)
CRES includes Prior Acts coverage as a standard feature to cover past closings, as long as you have 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.
If you’ve had gaps in E&O coverage or no E&O coverage, we’re the only company that goes a step further to offer optional FULL Prior Acts coverage for ALL past transactions — even if your business doesn’t currently have an E&O policy. That’s security! (See our CRES Extras below).
Does the real estate E&O policy cover all types of properties, including ones in which I have an ownership?
CRES real estate E&O + ClaimPrevent™ policies include coverage related to all types of properties. And, while many companies will only cover “primary residence” agent-owned property transactions, we go beyond that to cover other properties with 1-4 units in which the agent has an ownership interest or investment.
CRES real estate E&O + ClaimPrevent™ covers transactions where you as the agent are involved in listing and selling residential properties owned by relatives, as part of the Agent-Owned Property coverage. Many E&O companies do not cover these transactions, or they charge a premium to buy extra coverage.
CRES real estate E&O + ClaimPrevent™ insurance policies cover all real estate activities requiring a license, including commercial sales, commercial property management, 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.
You can also include residential leasing, residential property management, and residential appraisals coverage in your CRES policy.
Of course, if you need to add coverage to your policy for other activities in the future, you can always do that as well.
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!
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! Exclusive to CRES (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 details for your state
What’s included with a CRES Real Estate E&O + ClaimPrevent™ Policy
The details of an E&O policy are so important, yet people rarely read the fine print until after a claim is filed. A CRES real estate E&O + ClaimPrevent™ policy includes important essential standards plus exclusive features in our base policies — often at a lower price than policies with less coverage. Here’s a quick summary of what’s typically included with our policies*:
- ClaimPrevent™ Legal Advisory Services. Access 7-days a week to our team of local real estate litigation attorneys for phone consultations, document review, letter writing and more to help you resolve issues early to prevent them from becoming claims.
- First Dollar Defense. This eliminates the retention (out-of-pocket claims expense) for claims that involve only attorney’s fees. (If damages are paid, you may have to pay the retention – unless you’ve provided a Qualified Home Warranty or Building Permit History Report to the client.)
- Agent-Owned Property. Covers sales of property of 1-4 units that you own. (A transaction will require a written home inspection, approved home warranty, and other details. Learn more in our general FAQs.)
- Prior Acts. Coverage for all prior transactions, while you have had continuous E&O coverage. (If you have had gaps in coverage, see FULL Prior Acts coverage under CRES Extras below.)
- Lock Box. Property damage and bodily injury related to your lockbox.
- Discipline Hearing Expense. This is usually optional. Some companies include it as part of the policy; some may include it with Risk Management.
- REOs and Short Sales. Some policies restrict or exclude these sales. If you list REOs, you may want to also have Property Management coverage.
- Megan’s Law. Coverage for failing to disclose deaths or traumatic events that occurred at a property
- Data Breach Notification. Up to $5,000 in coverage to notify clients of a data breach (cyber security information breach) should one occur.
Because your CRES E&O + ClaimPrevent™ policy will be customized for your activities, your base policy can include:
- Commercial Sales/Leasing/Property Management. Covers your commercial real estate activities.
- Residential Leasing/Property Management. Covers licensed and unlicensed activities.
CRES Extras – Low-Cost Optional Coverage in Your E&O Policy
These valuable coverage options are either included (depending on your state) or can be added to meet your business needs:
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 injury and property damage that may occur during open houses, showings or other selling activities.
Seller’s E&O Protection Plan (may be standard or a low-cost option in your state)
Many of our real estate E&O + ClaimPrevent™ policies include Seller’s E&O, but for those states where we don’t, it can be added for a small fee. 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 be extended for an additional 180 days. Uninsured sellers who are sued by buyers often respond by suing their agent. But when they are 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 that 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!
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.
FULL Prior Acts Coverage
This option covers ALL of your past transactions back to your original license date – even if you didn’t have an E&O policy at the time of the transaction or have had gaps in your E&O coverage! Exclusive to CRES
Appraisals and Mortgage Brokering activities are not typically included in a base policy. If you perform these activities, add this coverage for work with mortgage companies and government entities.
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.
Cyber Liability Coverage for Damages
CRES policies come standard with Data Breach notification coverage up to $5,000. Cyber Liability coverage can be purchased at various limits to cover damages that result from a data breach.
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 $5,000 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).*
CRES Building Permit History Reports
Nearly 1 in 5 E&O claims are related to permit issues. Our Building Permit History Reports reduce your retention (out-of-pocket claims expense) and your claims liability when you share them with buyers before close of sale. 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 retention reduction amounts vary by program. The E&O Retention Reduction applies to any real estate licensed Real Estate Agents Alliance Purchasing Group (REAAPG) 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 REAAPG. Not available in all states. Certain restrictions apply.