Why Errors and Omissions Insurance Are a Must for Real Estate Agents

Errors and omissions (E & O) insurance is a type of insurance coverage that covers individuals and companies when their client holds them liable for a deliverable that failed to meet expectations. Every professionals or firm offering services in exchange for a certain fee are exposed to an E & O risk, according to the Insurance Journal.

E&O is important for real estate agents especially if they unknowingly represented delinquent buyers and sellers and are sued because of the misrepresentation. It provides them with a hedge against financial losses that may otherwise ruin a small company into the ground.

Insurance underwriter Victor O. Schinnerer & Co. reports that the most common types of claims submitted to its office include contract error, property valuation, specific performance, escrow, investment value, structural issues, and title issues, according to The Wall Street Journal. Outright fraudulent claims are not included since it is not necessarily covered by E & O insurance.  

When agents are insured, the insurer shoulders a huge sum of the litigation fees of up to $1 million including deductibles. The insurer also takes care of hiring legal help for the agent, according to the report. 

Many agents scrimp on buying an E & O insurance policy believing that as long as they do things right, they can steer clear of lawsuits. After all, the numbers say about 90 percent of agents insured by Schinnerer had never been sued for a claim, noted Schinnerer vice president Eric Myers to the Journal.   

Still agents should place a tremendous amount of value on getting an insurance to protect themselves from a “small but dangerous risk.”

“If you're going to court, it can get expensive pretty fast,” he told the Journal.

Schinnerer data showed that some 50 to 75 percent of agents have E & O insurance. State requirements, particularly in the Midwest and the South helped in getting these agents insured. Other states do not impose E & O insurance as a requirement for agents and brokers.

E & O policies can be bought by agents individually or through their brokers, the report revealed.  The report said agents can buy policies with annual premium average fees of $600 if they earn no more than $500,000 annually. The fee could go higher if they earn more or “operate in most expensive areas.”

Avoiding giving out the wrong information to potential clients is a huge challenge for most real estate agents. Thus, it is crucial to give potential clients the right impression when marketing your listings to them by providing accurate information and photos of your portfolio.

Realbiz Media Group, Inc. RBIZ develops proprietary video marketing software that agents and their brokers can use to promote their virtual tour listings online. The company offers a Virtual Tour Program that allows real estate sellers to create virtual tours and presentations that are optimized for mobile viewing and could be syndicated through social media for only $29.95 a month.

The program is equipped with a video search engine optimization (VSEO) tool that automatically generate meta tags and descriptions for virtual tours and listings agents have uploaded to the platform so that they would be found easily by consumers online.

The program also has tools for creating QR codes, e-flyers, and seller reports as bonus features.

To learn more about Realbiz Media and its products, contact sales@realbizmediagroup.comor call 1.888.REAL.BIZ (888.732.5249).