What Is Error and Omissions Insurance?

What if a real estate agent mistakenly gave wrong information or didn't mention flaws of a residential home? These kinds of mistakes that involve you or your agents for errors, omissions, negligence, and more are inevitable. But, this may lead to lawsuits and affect the business's integrity, sales or finances. For this, you might need Error & Omissions Insurance.

Understanding Errors & Omissions Insurance

E&O Insurance, also known as professional liability insurance, is one of the business liability insurance policies offered in the market. This insurance can help protect your business against claims for inadequate work or negligence in line with your professional services. It can cover legal costs like court fees, settlement costs, and more.

Is E&O Insurance Required?

Agents and brokers must have their E&O Insurance. Some states require real estate professionals to present it for their fees or approval.

Here are some states that may require an agent or broker to have E&O Insurance:

• Alaska

• Colorado

• Kentucky

• Iowa

• Idaho

• Mississippi

• Louisiana

• Wyoming

• North Dakota

• Nebraska

• South Dakota

• New Mexico

• Tennessee

• Rhode Island

Common Claims for E&O Insurance

Clients may file a lawsuit against your business for failure to deliver promised services, negligent actions, errors, and omissions. Here are some sample situations it may apply:

• Termite damage to the house

• Forbidden use of purchase property

• Lying about the property location

• Inaccurate Advice

• Breach of Contract

E&O Insurance Coverage

If a complaint about your business' professional services leads to a lawsuit, your insurance company may cover legal fees like

• Witness and court costs

• Attorney fees

• Administrative costs

• Fines, settlements, and judgments

Conclusion

It is impossible to avoid making errors and mistakes when running a business. It is important to be prepared to protect your business and sales in case it happens. Knowing how E&O insurance can help you as a business, agent, broker or appraiser will be beneficial. Be attentive and careful to avoid mistakes or claims by providing honest and excellent services to your clients.

At Second Western Insurance Services, we do our best to make sure that our clients are well-protected with affordable and comprehensive policies. We will go the extra mile to help you with your needs. To learn more about how we can help you, please contact our agency at (818) 952-5203 or Click Here to request a free quote. Topics and coverage discussed in this article are not guaranteed, consult with your agents to determine what your policy does and does not cover. We are more than happy to help!