As a realtor, you are in charge of transferring one person's property into the possession of another. Given the value and magnitude of the item you sell — a dwelling — you must ensure the process goes smoothly. If you make a mistake, it might cost the current and prospective homeowners dearly. Their losses might lead them to take action against your business. How can such results harm your business? What can you do to fix the problem?
In these cases, professional liability insurance (E&O coverage) might help the agency. It might prove critical to your business' survival following allegations of mistakes.
What Is E & O Coverage?
All businesses pose risks to their clients. If the business's action or inaction harms the client, the client usually can take action. They often have the right to sue or request other settlements from the agency.
To safeguard against these risks, realtors should protect themselves with liability insurance. Most businesses carry general liability insurance. This policy helps if the business causes injuries or property damage to the client.
However, E & O insurance is more specific liability coverage. It extends to professional mistakes, more than physical ones. If a client sustains a financial loss because of your services, turn to this coverage. It's beneficial because many general policies won't cover professional errors.
Why Do Realtors Need E & O Coverage?
When someone buys a home from you, they expect you to help them take possession of the property. This will involve a lot of paperwork, and careful observation of real estate law. If you don't perform your duties correctly, the client might have a right to sue you.
Let's say that one of your clients sues you. In the suit, they allege that you didn't tell them that, at one time, asbestos existed in the home. In fact, you did disclose this fact. You also told the client that no significant asbestos contamination remained. The client signed a waiver that they understood this fact. In this case, the claim might prove unfounded, because you provided disclosure.
Still, even if the client's case fails, you might still face hefty legal fees. These fees could put the business in dire straits. If you have E&O coverage, it will often pay for lawsuit expenses in this situation. Consider it protection in case the course of your work leads to problems.
Remember that the best way to avoid claims is to follow a strict reporting process. Keep documentation of all your interactions with clients. Also, always perform your work in a legal and ethical manner. Intentional harm or unfair profiting is rarely covered on your policy.
Keep your real estate business secure at all times. Get E & O insurance today!
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