Professional Liability (E&O) Insurance
An errors and omissions (E&O) policy, also known as professional liability insurance, provides financial protection for you and your business against accusations of professional negligence, breach of contract and even seemingly innocent business mistakes.
Regardless of whether or not you are in the wrong, the cost of responding to accusations and the associated legal defense can be substantial. E&O insurance helps protect your livelihood, reputation and hard-earned assets.
Why Real Estate Professionals Need E&O Insurance
Most Common Claims:
Inaccurate Listing Description
You list a property with an inaccurate description and unknowingly mislead a buyer to purchase the property.
Undisclosed Structural Flaw
A client claims you did not disclose a property defect, such as the presence of mold. After they move in and discover the issue, they ask you for compensation.
Buyer’s Remorse
A client purchases a property and quickly realizes they overspent. They blame you for encouraging them to offer too much on the purchase agreement, just so you can make a commission.
Breach of Fiduciary Duty
During the negotiation of a home sale, your client accuses you of not acting in their best interest and breaching your fiduciary duty.
Wrongful Discrimination
A client accuses you of not offering them the same level of service as your other clients because of their race, religion or gender.
Wrongful Eviction
You are accused of wrongfully evicting a tenant because you accidentally did not post all the legally required notices.
How E&O Insurance Protects You:
Provide an Expert Attorney
When you are sued, you will be connected with an expert attorney to defend your business.
Pay Legal Fees & Defense Costs
Lawsuits can be very costly, even if you are not in the wrong. E&O may pay for your legal & defense costs.
Pay Court Judgment or Settlement
If you are sued and lose, or reach a settlement prior to trial, your E&O policy may provide funds for court judgments or plaintiff settlements.
Attention Brokers: E&O Insurance also Covers the Actions of Your Agents!
Please note that the insurer is not obligated to pay your losses if you are dishonest, intentionally commit fraud, act with malicious intent or willingly violate the law.
Please read the policy terms for a full disclosure.
Who Needs E&O Insurance
Nearly every real estate professional can benefit from the protection of an E&O policy. Whether you are handling only a few transactions per year or you run the highest volume team in your area, protecting your business should be a top priority. When your livelihood is on the line, it is important you get insurance coverage that is custom tailored for your business. RealShield Insurance specializes in insurance coverage for real estate professionals, which means we offer policies that provide protection custom tailored for the unique needs of real estate agents, brokers and property management companies.
Difference Between E&O and General Liability Insurance
E&O Insurance protects your business if you are sued for performing your real estate services negligently (even if you haven’t made an actual mistake) and covers issues related to contracts, disclosures, fiduciary duty, and human error. General Liability protects your business from claims of bodily injury, property damage and advertising injury.
It’s strongly recommended to combine a General Liability Insurance with an E&O Insurance policy to maximize your protection and save costs. This helps reduce gaps in liability and keep you and your business protected.
Get E&O Insurance
RealShield Insurance can provide you with E&O insurance and general liability insurance to protect your real estate business. You can choose to get your policy 100% online through our website or you can call our team of experts for advice.
We insure individual real estate brokers & agents, real estate brokerage firms, and property management firms across Texas. Our E&O policies start at $22.50 per month and our general liability policies start at $29.17 per month. You can purchase them individually or bundle them right on our easy-to-navigate online system. You can request an instant quote on our website.
Professional Liability (E&O) Insurance FAQs
According to NAR, 1 in 5 Texas Realtors will incur an E&O claim at some point in their real estate career. Even the most experienced and well-intentioned real estate professionals encounter claims. Protect you and your business before a claim happens!
Yes. Errors and Omissions (E&O) insurance is an industry synonym for Professional Liability insurance. The terms are used interchangeable.
Many commercial and residential clients would not consider working with a real estate professional that doesn’t carry business insurance coverage. Experienced clients understand that if there is a problem with the transaction, they need to be working with not only a licensed professional, but an insured professional.
E&O insurance is recommended by TREC, TAR and NAR but not required for all brokers and agents in Texas. However, if a designated broker owns less than 10% of a brokerage entity they are sponsoring, they are required by TREC to have $1M in E&O insurance.
The more active your real estate business is and the more revenue your business earns, the more you will pay in E&O insurance. Other risk variables are considered too. For $1M in liability coverage, the average agent, broker or company that earns $30k in commission revenue pays about $400 per year. The average agent, broker or company that earns $100k annually pays about $900 annually for E&O Insurance. The average agent, broker or company that earns $250k pays about $1,500. The average agent, broker or company that earns $1M pays about $2,900.
It depends on your transaction types and transaction volume. Our most popular option is $1M in coverage. Remember, most real estate claims quickly incur a significant amount of attorney defense costs, typically amounting to more than six figures. Get an instant quote right on our website!
E&O insurance is typically purchased for a one year term. This means your cost of insurance is not subject to change until renewal the following year. If you need to cancel your policy, you can do so anytime on a prorated basis. Lastly, all of our policies include a 100% money back guarantee within 14 days of purchase.
Complete the online quoting process for the business activity that you are most active in (based on gross revenue). Once that quote is generated online, call (800) 598-5598 to speak with our team. We will manually add the second business activity, which typically costs around 10% in additional premium.
Many real estate professionals get sued for situations in which they are 100% innocent. Unfortunately, they often get sued by the clients they trust most including friends and family. We issue policies that cover the legal defense costs up to your policy limit in all situations. The minimal cost of coverage per month far outweighs the disruption of a lawsuit to your day-to-day real estate work. Many of our online competitors have minimal defense cost coverage included in their policies, so be careful!
Yes, our system will keep track of your renewal date so you don’t have to worry about it! If your policy is eligible for renewal, you will receive a billing notice 60-90 days prior to the new policy’s effective date.
We strongly recommend adding general liability insurance coverage to your E&O insurance policy. The two types of coverage help maximize your protection. Additionally, by bundling them together – you can save 10% or more!
If you own investment properties in addition to providing real estate services, we recommend you call us before completing an instant quote on our website. Our standard policies do not include coverage for your investment properties but our team can provide other policy options for your particular situation.
Insurance carriers evaluate risk of a real estate brokerage, property management firm or individual professional based upon many variables. These variables include but are not limited to the volume and types of transactions they perform, how much real estate experience they have, where they are located, etc. Our standard policy considers a future 12-month commission and fee revenue projection to determine how active your firm is, thus how much risk is assigned to the firm. The more active your firm is and the more revenue your firm earns, the more you will pay in E&O insurance. Our most basic policy starts at $22.50 per month and ranges upward.
You will not need to let us know if your revenue changes or if you hire more agents throughout the term of your policy. We will ask some basic update questions each year upon renewal to revisit any significant underwriting changes.
Our team reviews all applications, but if you want the quickest and most accurate quote, it is important to enter your gross commission projection rather than gross property sales.