Real Estate Professionals are in a unique situation in the modern economy. You walk the line between firm insurance and your own personal Errors and Omissions (E&O) insurance. Real estate E&O insurance was created to mitigate financial risk and protect brokers and agents should a consumer become dissatisfied after a transaction has occurred. There is real estate firm E&O insurance (designed to protect the firm), and personal E&O insurance (designed to protect the individual agent).
A real estate licensee may be covered by a firm’s policy while you are working under that firm. But each time you change firms, you open yourself up to the risk of a gap in insurance. You may think that a firm’s insurance is all you need — that by being covered by one firm’s policy to the next as you switch brokers covers you for all past transactions. Unfortunately, this just isn’t true. When you change firms, you may not be covered for the sales that occurred under the coverage of your old firm. And your new firm certainly won’t cover past transactions made under a prior firm.
What occurs when your current or prior firm sells or goes out of business? You might believe if the firm had paid E&O coverage at the time of a transaction, then the transaction is covered. Unfortunately, that is only true if there is insurance in place at the time of the transaction and it is maintained without interruption until a claim needs to be filed. Any gap in coverage likely means there is NO coverage. Since claims can be filed 5-10 years after a transaction, you may not have the coverage when you need it if the firm failed to maintain E&O.
This is where portable E&O liability insurance becomes crucial. No matter who you work for or when, if you have a personal E&O insurance policy, throughout your transaction history you can be covered for past transactions. Personal real estate E&O insurance was created with portability in mind. No matter where you go, you’re covered — as long as you maintain continuous coverage with your personal policy. You just can’t get this peace of mind relying solely on your firm’s coverage.
For about $1 a day or less, you can take the right steps to make sure your work remains covered to protect you from personal liability. Check out more on this subject at CRES: https://www.cresinsurance.com/why-do-you-need-an-individual-errors-and-omissions-insurance-policy/