How E & O Insurance Can Help Your Realtor Clients

Posted on: May 11, 2023 by Huntersure

E & O insurance often protects companies and employees from lawsuits related to professional mistakes that could have happened while doing business. A policy of this type can pay court costs and related settlements that could be too expensive for most companies. An E&O policy is essential for real estate agents to defend against various issues.

What Does E & O Insurance Cover?

If a client files an errors and omissions claim against a realtor, they could face costly legal defense expenses, including pricey attorney fees, court costs, and judgments or settlements that can quickly skyrocket. Some claims could result in disciplinary actions through a licensing board or regulatory agency. Defense against a lawsuit can also result in lost wages due to time spent during depositions and sitting in the courtroom. E&O insurance helps to cover the expenses associated with all of these legal issues when they stem from mistakes made in professional work.

Required Errors & Omissions Insurance for Real Estate Professionals

Some realtors choose to purchase an individual errors and omissions policy, while others utilize an umbrella policy from their broker. While not every state requires E&O for realtors, the following states have a mandatory requirement for them to carry an errors and omissions policy:

  • Alaska
  • Colorado
  • Idaho
  • Iowa
  • Kentucky
  • Louisiana
  • Mississippi
  • Nebraska
  • New Mexico
  • North Dakota
  • Rhode Island
  • South Dakota
  • Tennessee
  • Wyoming

Common Reasons Realtors Need Errors & Omissions Insurance

When a realtor agrees to represent a client in purchasing a home, they agree to act in that client’s best interest. In today’s highly competitive market, it is common for the realtor to advise the client to bring a firm bid. However, suppose the realtor advises the client to forego an inspection of the home to strengthen their bid. In that case, the realtor is open to a liability suit for giving erroneous advice when the client purchases the home and finds extensive damage down the line. Common reasons for home buyers and sellers to file lawsuits against real estate professionals include the following lousy advice regarding bids of listings or breach of contract. Likewise, there is potentially an issue of discrimination, real or perceived. The realtor may have failed to adhere to their fiduciary responsibilities. Furthermore, improper disclosures regarding a home or property are possible. There also could have been an injury or loss during an open house tour.

Is E&O Insurance Worth the Cost?

E & O insurance is generally very affordable, and the potential costs of professional lawsuits can be extensive. Claims against realtors have been increasing in recent years, and industry forecasts show they will continue to increase in the near future. While most people agree these policies are well worth the money, examining the pros and cons is worthwhile.


There are some advantages to having E & O Insurance. Ultimately, these policies provide financial protection against potentially expensive lawsuits. Individual coverage is relatively inexpensive. Likewise, having a policy brings peace of mind. Many states require coverage.


Some cons come with this coverage. Significantly, cost and coverage details vary according to agency and area. Premiums are market-driven and often higher for newer real estate professionals.

About Huntersure

Huntersure LLC is a full-service Managing General Agency that has provided insurance program administration for professional liability products to our partners across the United States since 2007. We specialize in providing insurance solutions for businesses of all sizes. Our program features can cover small firms (grossing $2.5 million annually) to large corporations (grossing $25 million annually or more). We make doing business with us easy with our breadth and depth of knowledge of E&O insurance, our proprietary underwriting system that allows for responsive quoting, binding, and policy issuance, and tailored products to meet the needs of your insureds. Give us a call at (855) 585-6255 to learn more.

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