Errors and omissions insurance protect brokers against frivolous lawsuits and large judgments. Many brokers such as Bill Edge believe it is a cost of doing business which is well worth the investment. Other Brokers think the cost is too high in relationship to the small risk of being sued. And that attorneys are not going to waste their time suing someone without insurance. I use E & O as a sales tool when making my presentation to future client. While we do our best to give everyone the utmost best service and advice possible there is always the possibility of human error. We want our clients to know we care enough about them to spend the money for a policy
Errors and Omissions Insurance has a dual purpose
- To protect the client against negligence
- To protect the Broker against frivolous lawsuits and those that have merit
In truth claims against Real Estate Brokers and Agents have decreased enormously since the 1980’s. The reasons are:
- Tort reform in Texas
- Better trained agents
- A summary judgment could force you into trail in the 1980’s
- The Plaintiff no longer has a free hand to file a claim against you.
Ways to avoid a lawsuit and protect your client
- The seller’s disclosure notice needs to be always utilized.
- The buyer should always have a home warranty.
- The buyer should always have a property inspection by a trained inspector.
The Basic Coverage as defined by Realtor Magazine
- Prior acts–Unlimited coverage for qualifying companies with two years or more continuous E&O coverage and acceptable loss experience
- Defense costs–Paid in addition to the limits of liability
- Personal injury–Coverage included for libel, slander, and invasion of privacy
- Lockbox–Property damage up to $25,000
Call Bill Edge at 713-240-2949 to see Houston homes in 24 hours or less
Source: Dick Hargis, Realtor Magazine.org