Real Estate Agent E&O Insurance Checklist

Agent-owned property: Do you plan on selling property that you own? Some policies exclude this type of transaction or only cover owner-occupied property, not rental properties. Many also require inspections, home warranties, etc.

Deductible: How much you need to pay in the case of a claim. Deductibles usually range from $2,500-$100,000.

Discipline Hearing Expense: This is usually optional. Some companies include it as part of the policy; some may include it with Risk Management.

Discrimination/FAIR Housing: Although not as prevalent, these claims still occur, especially if doing leasing. This coverage is usually optional.

First Dollar Defense: This eliminates the deductible for claims that involve only attorney’s fees. However, if damages are paid, you will likely have to pay the deductible.

Lock Box: Make sure you have this if you are doing listings. Some policies cover just Property Damage, not Bodily Injury. You want a policy that covers both.

Megan’s Law: This coverage pays for the diminished value of a property due to the undisclosed death or bodily injury of any person. This is standard on some policies, and not available on others.

Claims Expense Outside: This means that attorney fees are covered separately from the limit of liability.

Open House/Showing Coverage: Liability coverage usually only covers injuries at the office. This coverage extends injury and property damage coverage to your professional activities outside of the office, including items such as dog bites, falls, and broken property.

Pollution Coverage: Hidden dangers can occur, especially on older properties. This coverage is usually optional.

Prior Acts: Generally, E&O policies provide coverage for claims made against the named insured and its agents. So moving firms will likely cause you to lose coverage because the policy is in the firm’s name, not yours. Also, coverage must be continuous to cover prior sales. So be sure to get your own E&O policy before changing firms.

REOs and Short Sales: Some policies restrict or exclude these sales. If you list REOs you may want to also have property management coverage.

Risk Management: Having proper legal counseling can be the difference between an easy resolution and a claim. Some policies include access to an attorney before a claim is filed, not just after.

Appraisals: Appraisals are not normally covered. If you do appraisals, you will need your own policy to work with mortgage companies and government entities.

Land: Many policies cover residential real estate sales, not land sales.