Risk Management is the first line of defense against potential errors and omissions claims for real estate professionals. Reach out as soon as you think a dispute or claim might be brewing – involving CRES Risk Management attorneys early can often resolve an issue BEFORE it turns into a full-blown claim. Our panel of experienced real estate defense attorneys can advise on your specific situation in your area.
What is a potential claim? You receive a complaint from the buyer or seller about something related to the transaction or the property. Remember, when you contact CRES Risk Management, you are not filing a claim, so it does not affect your future E&O premiums. You are merely asking for legal expertise to either help you diffuse the situation or guide you through the next steps.
What is a claim? Whenever you receive a written demand for money or services, you have an E&O claim. Report the claim situation as soon as possible to CRES. Be sure not to discuss the situation with anyone other than your real estate broker or brokerage owner, your E&O carrier, and the carrier’s legal counsel. (Many times, contacting outside legal counsel who may not be experts in real estate errors and omissions claims will only make things worse.)
What if an attorney contacts you? Should you receive a phone call or correspondence from another attorney, gather information from the attorney only, but do not answer any questions. Ask the attorney to send you an email summarizing the conversation and any requests. Review your transaction file to gather all the information about the transaction. Before you respond, talk to legal counsel to help ensure the information you provide doesn’t pull you into a lawsuit.
Your Real Estate E&O Policy Requires Notice of Potential Claims
Most errors and omissions policies cover claims “made and reported” during the policy period. This becomes critical when you or your company renew your E&O policy. Each new policy period starts a new “claims made and reported” period. You must be sure to notify your errors and omissions carrier of anything that could turn into a claim when you first are made aware of the potential problem. If you don’t, and your policy renews into a new “claims made and reported” period, those problems you knew about but didn’t report during the prior policy period won’t be covered under the new policy.
As part of your renewal process, you’ll be asked if you or your company is aware of any issues or incidents that could become claims. Be sure to disclose a demand letter, unhappy client, communication from an attorney, etc., all of which are incidents or potential incidents. Otherwise, you will be denied coverage during the new policy period should any of the incidents turn into claims or lawsuits.
The average real estate lawsuit now exceeds $80,000. Neither you nor your brokerage want to be caught without coverage when you need it most.
So, before you renew your individual policy, be sure you contact your carrier prior to renewal to advise them of any potential issues. If you are covered under a company policy, you may not be aware of when the policy renews, which makes it even more important to advise your broker of any potential problems when they happen.
By keeping your broker aware of potential problems, not only might your broker be able to help, but you are helping to protect their business. Many skilled real estate professionals find themselves accused of wrongdoing, sometimes unjustly. So, it’s better to let your broker and E&O carrier know and help you resolve the situation. (If you don’t let your broker know and the problem does blow up, the costs, stress, and loss of reputation will cause a much worse situation for you.)
Our philosophy at CRES is “When in doubt . . . report it.” You’ll protect yourself, your brokerage, and help ensure you do have E&O coverage for the situation should you need it.
Be Sure Your Real Estate E&O Includes Pre-Claim Legal Services
Having expert Legal counsel to rely on as part of your CRES errors and omissions insurance plan can help you prevent claims, reduce your stress, and help maintain your reputation. And the help is available pre-claim (unlike other carriers who won’t help you until you have a claim).
CRES has been protecting real estate professionals for more than 25 years, and we’re real estate E&O specialists. Let us find you the best protection at the best price. As part of one of the largest insurance brokers in the world, we have access to more real estate E&O options than just about anyone.
Contact us at 800.880.2747 for a quote and any help you need to choose the best coverage for you.
CRES Risk Management – available business days 8am-5pm PST.
GGB.LV2.CRES.RiskMgt@ajg.com | (877) 273-7467
