What is Real Estate Errors & Omissions Liability Insurance?

Real Estate Errors and Omissions Insurance (E&O) is a line of coverage designed to protect businesses that specialize in real estate. It mostly covers real estate agents and brokers, however it can be extended to cover landlords and a few other classifications. Just as any normal E&O policy will do, a Real Estate E&O policy protects the insured against any mistakes due to negligence or breach of contract made while doing business. The coverages are tailored for this specific line of work.

Why Have Real Estate Errors & Omissions Liability Insurance?

A Real Estate E&O policy can cover costs for legal defense as well as settlements for negligence and breach of contract. Hiring a lawyer or reaching a settlement out of court can cost a business a lot of money. Many small agencies do not have the ability to pay for these costs on their own. Even proving non-negligence in court can have huge costs. For example, a home inspector is hired to check a house before a couple purchases it. This inspector informs the couple about minor structural damage that should be taken care of, but it does not need to be fixed right away. A week later, that portion of the house collapses. The couple sues the home inspector for negligence. Without a real estate E&O policy the inspector would have to pay to settle or to hire a lawyer, which could potentially ruin his business. But with the right coverage the risk of negligence can be protected.

Real Estate Errors & Omissions Claims Example

Home Buying Misrepresentation

As part of her representation services, Susan prepared a mock closing statement for her realty client. This statement was meant as a guide for her clients to use to calculate the amount of cash needed to purchase a property in their price range. The statement contained errors, causing the buyer to save less than needed to close on the home. As a result, the sale did not go through at closing due to lack of funds. The buyer sued for misrepresentation, and had to pay the damages out of pocket.

Coverage May Include

  • Environmental Pollutants coverage
  • Full Prior Acts coverage available
  • Defense outside the limit
  • Duty to defend
  • Internet coverage provided
  • Optional Package policy with errors & omissions, general liability and business personal property coverage. General liability includes coverage for bodily injury arising out of professional services

Real Estate Errors and Omissions Application:


Available Markets