NEW YORK – Oct. 22, 2013 – Real estate brokers should carry Professional Liability, or Errors and Omissions (E&O), insurance to protect them from lawsuits – but they also must read the policy.
It’s important for brokers covered by E&O to understand the various exclusions and coverage limitations. For example, some insurance carriers won’t cover the sale of agent-owned properties; and if they do, they often prohibit the agent-owner from acting as the listing agent or representing the buyer. The policy may also require the agent to have a home inspection or home warranty.
E&O policies also state whether defense costs are inside or outside the limits of liability.
In addition, brokers should recognize if their E&O insurance limits coverage for certain activities. For example, the amount of general liability coverage may be less if a lawsuit is based on discrimination; and if a claim involves mold or asbestos, the policyholder may not have any coverage at all.
Bottom line: It’s important for agents and brokers to carefully read their E&O policies so they understand what is – and is not – covered.
Source: Realty Times (10/21/13) Hunt, Bob
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