Why Real Estate Agents Need Errors and Omissions (E&O) Insurance

A real estate agent is a representative of a buyer or a seller in real estate undertakings. To become a real estate agent, one must have a professional license. These agents are paid on commissions depending on the sales they have made.

There are different types of commissions percentages based on the agreement the seller has with the agent. Some companies may offer 100% commission to an agent like what Ashby & Graff do. Real estate agents give advice and guidance, and one of the essential types of coverage they should have is the error and omission insurance. The error and omissions insurance is also known as professional liability insurance. Below are the reasons why they need this type of insurance.

Court and Legal Expenses are Expensive

Some real estate agents may avoid error and omissions insurance because they think their job is carefully performed, and there is no likelihood of damages. The truth of the matter is, no matter how careful you are, something can go wrong when you least expect. The best way to protect yourself is to take an error and omissions insurance for potential risks. When a client sues you without this type of coverage, you will likely go through a significant financial loss because of expenses you will incur on the court and legal charges. Whether you or the client wins, you have to pay for this lawsuit expenses.

Coverage

The error and omissions insurance covers real estate agent from risks the general liability insurance cannot offer. The insured is protected against a variety of legal, which the real estate broker sells as a large package. The package includes defense cost, alleged and actual negligence, claims, and damages from past services provided, claims, and losses.

Maintain a License

A real estate agent license is an essential document because it gives them access to many benefits. For example, one can earn 100% commission through a permit. A real estate agent will have access to more details in real estate Investments, which can expand his business. Business knowledge is also increased. Once you have an error and omission insurance, you are assured that your business is a going concern, and therefore nothing will stop it from operating. With E&O insurance, one can maintain and receive a license.

Protect yourself

The likelihood of a client to sue you together with the real estate brokerage is very high. The error and Omission insurance contributes towards accurate record-keeping transactions and interaction with the client in question. With this information, you can defend yourself with this kind of evidence. It is also essential as a real estate agent to keep a journal of the client's detailed information. For example, you can record phone calls, maintain emails, and note the conversations you have on different topics. Ensure your clients sign documents on various actions they want to undertake. Keeping this information can help you when the client files a lawsuit against your services.

Advantage of Zero Deductibles

The amount of money you pay before your insurance plan starts is called a deductible; a must pay for the real estate agents depending on the brokerage they choose. This fee varies from one brokerage to the other. Some brokerages offer zero deductibles on the professional liability insurance packages. The only thing that a real estate agent must do is have a complete file of required documents. This is a good plan since an agent doesn't have to meet a minimum balance. The brokerage will contribute to expenses with immediate effect.

You may not need E&O insurance when you are carefully dealing with your business transactions and interactions, but you never know what will happen next. Getting an error and omission insurance will help you protect your finances and also the continuity of your business because the insurer will defend you.

You will also be at peace while dealing with clients since you don't have to worry about the outcome. When getting this type of coverage, it is also essential that you consider the exclusions. If an agent has claims that have resulted from dishonest acts cannot be covered in the application.