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Errors & Omissions Insurance for Real Estate Professionals
Errors & Omissions Insurance for
Real Estate Professionals
• The Schinnerer Real Estate program was established in 1983.
• Long term partnership with CNA.
• Chosen by the NATIONAL ASSOCIATION OF REALTORS® (NAR) for its members through the REALTOR Benefits® Program
Victor O. Schinnerer & Company, Inc.
• Charter Member of Schinnerer’s Elite Broker Network
• Over 3 Decades of Professional Liability / E&O
Insurance Experience and Expertise
• Industry Recognized Expert & Preferred Provider of
Professional Liability / E&O Insurance
• Call Today at 914-592-6505 or e-mail us at
Professional Liability Consulting Services, Inc.
The Basics
• What?
• Who?
• When?
• Where?
• Why?
What Should I Know About E&O
What is it?
What is E&O insurance?
What is an error?
What is omission? Today’s focus is Real Estate Professionals E&O
Who is it for?
Who is Covered under a Real Estate Professionals E&O Policy?
Who is it for?
Who? • Real Estate Agents • Real Estate Brokers • Real Estate Personal Assistants. • Appraisers • Property Managers • Leasing Agents • Mortgage Brokers • Auctioneers • Real Estate Consultants/Counselors
When is it useful?
When is E&O useful?
When is it useful?
When a customer, buyer or seller, is unhappy with a real estate related transaction and threatens to make a demand or actually makes a demand.
Where is it useful?
Where is E&O useful?
Where is it useful?
Look for policies that cover acts or omissions that happen anywhere in the world. Typically, claims are made or suit is brought against an insured in the United States of America, its territories or possessions or Puerto Rico or Canada.
How are mistakes made?
How do real estate professionals make
errors and omissions?
How are mistakes made?
How?
• Not documenting files
• Not focusing on details
• Not verifying information
• Acting outside scope of duties
How does it work?
How does an E&O policy work?
• Defense
• Indemnity
Why have it?
Why insure your Real Estate Business?
Why have it?
Why? • An insurance carrier will be with you during the
claim process
• You may be required to carry it
• Attracts the best agents
• Sends a message to clients that you are professional
Why have it?
Why?
• Staying continuously insured can reduce insurance costs
• Insurance protects your assets • Protects your staff
What other types of insurance do I need?
What?
• General Liability • Commercial Auto • Property • Workers Compensation • Health & Life
AY 2008-2012 – CLAIM TYPE
• Negligence
• Misrepresentation
• Fraud / Intentional Acts / Misconduct
• Breach Of Contract
• Breach of Fiduciary Duty
• Civil Rights / Fair Housing
AY 2008-2012 – PROBLEM AREA
• Contract Error
• Valuation
• Specific Performance
• Escrow
• Structure
• Investment Value
• Sewer / Well
• Water Infiltration
• Mold
• Title Issues
E&O Policy Specifics
Coverages:
• Broadly defined Professional Services • Duty to Defend • Coverage for “Innocent Insureds” • Coverage for Environmental Hazards • Coverage for Discrimination
E&O Policy Specifics
Coverages:
• Defense against licensing board complaints • Public Relations Coverage • Lockbox Coverage • Network and Privacy Protection • Open House
E&O Policy Specifics
Exclusions (what isn’t covered by E&O): • Contractual Liability
• Bodily Injury & Property Damage* • Pollution
E&O Policy Specifics
Exclusions (what isn’t covered by E&O): • Sale of a business • Value of a business or future value of
property • Insured vs. Insured • Property Syndication or REIT • Other interests, operations or activities • Violation of Law
E&O Policy Specifics
Specific Coverage Endorsements May Be Available to Address Other Exposures:
• Coverage for sale of owned residential property • Coverage for properties constructed and developed by
a related entity • Employment Practices Liability + Discrimination
E&O Policy Specifics
Specific Coverage Endorsements May Be Available to Address Other Exposures:
• Mold Coverage
• Non Profit D&O Coverage
• Extended Reporting Options
E&O Policy Specifics
Insurance Carrier:
• Stability & highly rated by AM Best
• Risk management services
• Excellent Claims Service
• Attorneys who specialize in defending real estate firms
E&O Policy Specifics
Insurance Carrier:
• Experience with handling real estate E&O claims
• E&O claims specialists, rather than generalists
• Pre-claims assistance
Avoid a Claim
• Document your files
• Know your limitations
• Do not misrepresent
• Use care in recommending others
• Watch your fiduciary duty
• Observe and document
• Disclose, Disclose, Disclose
Avoid a Claim • Keep current with local, state, and national
requirements. • Keep current with continuing education.
• Exercise care with multiple offers, back-up
offers, contingencies and dual agency.
Avoid a Claim • Do not act as lawyer and do not give legal advice
• Do not act as anything other than a real estate
professional
• Stick to what you know
• Use standard forms
Avoid a Claim
• Follow office procedures
• Disclose agency relationships
• Follow risk management guidelines,
advice and tips from NAR
When a claim has been made
• Act on it immediately
• If you have errors and omissions insurance, involve your carrier
REALTOR Benefits® Program
Member Benefits: • Special pricing – 5% discount where
allowable by law • Risk Management Toolbox – Claim scenarios,
webinars, toll-free hotline, on-line library
What should I know about E&O?
Questions
Errors & Omissions for Real Estate Professionals
Dennis Supraner
914-592-6505
[email protected] www.plcsi.com
Victor O. Schinnerer & Company, Inc.
WWW.Schinnerer.com/NAR
