An Overview of Real Estate Errors and Omissions Insurance
However talented or dedicated they might be, real estate agents are only human. And just like everyone else, they can make mistakes. In situations that involve land sales, housing, and other large transactions, mistakes made in real estate can lead to losses of several thousand or even millions of dollars for both the companies and the clients. Real estate errors and omissions insurance, however, can provide coverage for when things do go wrong.
Errors and omissions insurance is also called professional liability insurance or professional indemnity insurance. It is used in cases where a client believes that a service (or failure to provide service) from a company has hurt them financially. In the medical field, this is often called malpractice, although it can be used in almost any service industry—ranging from shipping to accounting to real estate.
Problems and Pitfalls
Real estate errors and omissions insurance protects against human error. For example, if a property’s acreage is recorded incorrectly, or if broker forgets to recommend a home inspection and problems are discovered after a home is sold, clients may sue the real estate broker. Restitution, settlements, and legal fees can cost quite a bit and may even put an agency out of business. Even when claims are groundless, lawyers aren’t cheap.
Where or not the client has a basis for their complaints, lawsuits because of simple mistakes can happen to any company. Real estate errors and omissions insurance can protect a firm from angry clients, court battles, and financial loss.