3 Things Insurance Agents Wished Real Estate Agents Understood
It’s estimated that there are over 40 million lawsuits filed in the United States each year. And, you can bet that in a transaction as large as the purchase and sale of real estate, that if a buyer or seller feels they were wronged — they’re going to sue.
Thanks to our litigious culture and the size and magnitude of the real estate transaction, real estate professionals have quite a bit of vulnerability and insurance agents have seen it all. By nature, they’re programmed to help professionals protect against an unexpected crisis.
While no one expects to need to file an insurance claim, it happens. Below are some of the things that insurance agents wished real estate professionals understood about their liability and the need for insurance:
#1. The Importance of Having E&O Insurance
If there’s one thing that insurance agents wish real estate professionals understood, it’s the importance of having professional E&O insurance. They need it — no question about it. This type of insurance is vital to protect the agent or broker in cases where dissatisfied clients seek legal action after a transaction closes.
Along with other benefits, E&O insurance aides in limiting the agent’s financial risks. It helps prevent real estate professionals from shouldering the full costs of defending against clients’ negligence claims, as well as funding any potential damages that are awarded.
E&O Insurance provides coverage for common claims, including:
Breach of duty
Breach of contract
Open houses and showings coverage (bodily injury/property damage)
Misrepresentation regarding the condition of the property
Consumer Protection Act
Earnest/escrow money dispute
Misrepresentation regarding flooding or leaks
Misrepresentation regarding the value of the property
Insurance agents know that this type of protection is a no-brainer when working with such large and detailed transactions, but real estate agents professionals don’t always see the value — until it’s too late.
#2. How Much Liability They Have (and Why That Matters)
Another thing insurance agents wished real estate professionals knew? Just how much liability they really have. Handling a transaction like the purchase and sale of real estate comes with a lot of opportunity for mistakes — whether intentional or unintentional. And, those can be costly.
People sue even when they don’t have much of a case, and the financial impact that can have on an agent can be crippling. Real estate professionals should always know their policy limitations, who their carrier is, and the expectations for filing claims.
Some insurance professionals recommend having liability insurance that offers coverage in the same amount (at least) of the largest deal you could potentially do in a year.
Remember: E&O insurance is a claims-made policy, so it is important that you obtain coverage before you take on your first client and keep it in force your entire career to ensure all transactions from the past are covered.
#3. How Often Real Estate Professionals Actually Get Sued
Don’t think that a potential lawsuit is improbable. The truth is that real estate agents and brokers are incredibly vulnerable to lawsuits and they happen far more than you might expect. A large number of deals, clients, and high-value transactions leave professionals in the field open to getting sued - no matter how diligent one may be.
Insurance agents want real estate professionals to remember that it can happen to anyone— and it’s important to always be prepared for the worst-case scenario.
The Easiest Way to Protect Yourself and Your Clients
In efforts to help our clients stay protected, Glide has partnered up with RealCare Insurance Marketing - a leading provider of insurance solutions for real estate agencies — to reduce the risks associated with disclosure-related lawsuits. Disclosure is, after all, the leading cause of real estate litigation.
Read the full press release to learn more about how this can benefit you!