Should Your Company Have a Real Estate E&O Policy?
Most Real Estate Brokerages in the U.S. buy their own Errors and Omissions policy to ensure the company is protected. Then, they charge their licensees for the coverage.
This prevents the safety of your company from being at the mercy of your individual licensee policies.
Benefits of a Company Real Estate E&O Plan
Your company will be better protected with your own Errors and Omissions Policy.
And you’ll have control over how much protection your company has — rather than your licensees. For example:
- If you rely on your licensees to have individual coverage, what If they don’t have coverage for a specific issue?
- What if the claim damages exceed the amount of their coverage in that specific area?
A licensee’s overall policy limits (likely to be much less than a company policy) won’t cover many situations.
When you take control of your real estate company’s E&O insurance coverage:
- Your company gets better coverage (with higher available limits) for less money
- You control the risks you cover – and the amount of protection your company has
- Your licensees get better coverage (when you can mention in your recruiting efforts)
- You avoid the need for Tail coverage. Your company policy will cover licensees and your company for past transactions.
- You ensure your brokerage is covered if your licensees let their policies lapse.
Here are the major differences between Firm and Individual real estate Errors and Omissions insurance policies:
Company Real Estate E&O Policy
- Covers the company, licensees, employees, Teams, etc. for actions of the Firm and licensees.
- Policy limits from $500,000 to $3 Million for everyone.
- Broader coverage options for Agent-Owned sales, Property Management, Commercial, etc.
- Covers the Firm and licensees for prior sales, no tail needed. Licensee transactions are covered if they leave.
- Usually less expensive than buying multiple Individual policies. (You can keep the savings or pass it on to your licensees.)
Individual Policies
- Covers the licensee. The company is “Additional Insured” for Vicarious Liability (supervision of the licensee)
- Policy limits usually lower. Firm Excess policy is needed to increase limits for all licensees of the Firm.
- May have lower limits for pollution and other vital coverage
- Some options available for Agent-Owned Property, etc.
- Coverage ends if licensee cancels policy, unless Tail is purchased.
- Need to renew by deadline or lose prior coverage. Broker needs to confirm that renewals are done on time.
When You Need a Company Real Estate E&O Policy, CRES Offers More
CRES policies also come with a local attorney that can assist with transaction related issues, because we would rather prevent claims than pay them.
CRES insures over 100,000 licensees across the country, and we’ve been the choice of top real estate professionals for 25 years.
Why not see how much more coverage your company could enjoy?
* Read policy for a full comparison of coverage and benefits. Certain restrictions apply. All coverage is subject to Underwriting and other qualifications.