As a real estate professional you will most certainly cross paths with a potential E&O claim during your career. So, what do you do? What don’t you do?
First of All, Don’t Panic
Regardless of how a potential claim presents itself (be it an angry email, strongly worded letter, or even a heated conversation with the unhappy party), DO NOT PANIC. Do not lose your professional cool. Do not immediately reply with a return threat. You absolutely must stay calm. Because at this moment, at the beginning of a potential claim, everything you say and do from this point on will be highly scrutinized.
THINGS YOU SHOULD DO:
If You Have a Potential Claim Situation, Call CRES
Once you know you have an unhappy buyer or seller, wouldn’t you rather get expert advice to help actually PREVENT that claim from happening? For CRES Real Estate E&O + ClaimPrevent® customers, you’ll have access to a Legal Hotline 7 days a week for advice BEFORE you have an actual claim.
If You Have a Claim, Call Your E&O Insurance Provider Claims Department
Should you actually receive a written demand for money or services, you have an actual claim. With most E&O providers, this is the only time they can help you — after the claim has already occurred. Once an official demand is received from a current or past client, your first call needs to be to the real estate E&O insurance claims department. They will be able to advise you in the next steps in the process, whether it’s a response communication, mediation, arbitration, or further legal action.
Document Everything
Once a potential claim has begun, you will need to document everything and make sure that you have all of the paperwork regarding the transaction organized. Your legal advisor will let you know if producing copies of all of your files is necessary. You may also need to provide contact information for all parties involved, including other real estate agents.
Start Reviewing
As the potential claims process progresses, you may need to provide an account of what happened. Begin reviewing your notes, emails and messages to make sure that you have those details recorded before they are forgotten or lost. Typing up your notes around the reason or situation that caused the threat of claim is a great step that will help identify if you’re missing documentation and need to hunt it down.
THINGS YOU SHOULD NOT DO:
Don’t Go it Alone
Just because you think the threat of a claim may be baseless or frivolous, do not make that determination yourself. Also, don’t ignore it — even if you think it won’t ultimately turn into a claim. A legal professional is the only one that can help you determine what action needs to take place.
Don’t Talk to the Wrong People
Once a potential or actual claim has started, your actions fall under increased scrutiny. This means that you need to use added discretion regarding all communication surrounding the transaction. Do not talk to anyone besides the broker for the office, your E&O insurance company, and your legal advisors.
Don’t go to a Lawyer Outside Your Real Estate E&O Insurance Provider
If your E&O insurance company provides legal advisory services BEFORE you have an actual claim (like CRES Real Estate E&O + ClaimPrevent®), then contact them prior to seeking any other legal guidance. A service like CRES ClaimPrevent® Legal Hotline can help you actually prevent claims before they ever happen.
(For CRES customers, every incident that is a potential claim should be reported to us, to help ensure that potential claim will be covered. See our related post, Report a Potential Real Estate E&O Incident Real-time to Reduce Risk of Coverage Denial.)
Should you have an actual claim, if you report the claim to an attorney who is not part of your insurance services, you may not be in compliance with your real estate E&O insurance policy. This means that you could compromise your coverage, muddy the communication process, or pay for services you don’t need.
When you have the right real estate E&O insurance, you are in a great position to meet a claim head on — or prevent that claim entirely — to protect yourself and your business. Keep your cool, document everything, and call your legal advisors right away. They will get started on the work of handling your claim (or help you actually PREVENT the claim from happening, if you are a CRES customer), so that you can get back to your business and your life.
Are you with another E&O company that doesn’t offer legal advisory services to help you prevent claims? Wouldn’t you rather try to prevent claims from ever happening — especially when you could have CRES E&O + ClaimPrevent® Legal Hotline usually for less than the E&O insurance you’re paying for now?
Every policy comes with access to our Legal Hotline — expert local attorneys available 7 days a week to help prevent claims and advise you in all your real estate transactions. Learn more about CRES Real Estate E&O + ClaimPrevent® if you’re not one of our happy customers already.
