No one's perfect. And if we're honest, mistakes probably happen more often than we'd like to admit. But don't sweat it. Just make sure you're protected when they do with Errors and Omissions (E&O) Insurance from Pearl Insurance.
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* Premiums can vary based on firm size, area of specialization, and more. All premiums are subject to a risk purchasing fee. Other taxes and fees may apply.
* This E&O coverage is intended for brokers/owners of real estate firms. Independent contractors do not qualify for this plan.
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We offer an E&O policy that's designed by and for real estate professionals—not something generic that's been modified, pieced together, and missing what you need. Here are just a few of our coverage highlights:
Agent-owned residential property transactions
What is an agent-owned property transaction?
Sometimes referred to as self-dealing, agent-owned transactions occur when an agent is the owner of a property and acts as a seller and/or buyer's agent on their own property's transaction.
A typical real estate transaction includes an agent working for a buyer or seller to market, sell, or assist with the purchase of residential property. The buyer or seller are the third parties in typical transactions. The intent of errors and omissions coverage is to protect the real estate professional from third-party claims, not claims from self-dealing.
Are agent-owned property transactions covered under errors and omissions insurance?
Agent-owned transactions, according to insurance company data, are very difficult to defend due to a perception that agents may be inclined to make a personal sale by any means necessary and would be held to a higher standard. In fact, agent-owned property claims on average pay out 5x that of a claim from a third-party transaction. For this reason, E&O policies typically include exclusions related to agent-owned property transactions when handled by the agent/owner. Many insurance plans will go on to include limited coverage through "givebacks" for agent-owned transactions when certain risk management procedures are met.
What if an agent is constructing and developing properties for sale?
An agent who is constructing and developing properties for sale will also run into exclusions. Coverage givebacks may not apply to constructed and/or developed properties. To secure coverage, a separate endorsement would be necessary naming that type of transaction coverage.
In order to uphold real estate professional codes of conduct and ethical guidelines, the best practice is to hire a disinterested agent from your firm to handle agent-owned property transactions. An arms-length transaction is easier to defend should the transaction result in a claim against you or your real estate firm.
Real Estate ProtectionPlus Coverage Option:
Our more commonly used agent-owned transaction givebacks include:
These additional coverage givebacks apply to arms-length transactions:
Subpoena assistance (no-cost legal assistance)
What is a subpoena?
A subpoena is a court-ordered command that requires you to do something which may include producing documents, appearing in court, or attending other legal proceedings in person.
What should I do if I am served a subpoena?
If you are served with a subpoena, you need the assistance of a legal professional. It is also important to notify your insurance carrier immediately.
If you have concerns about a real estate transaction, you should notify your insurance company and your legal counsel. You may be able to take action prior to a claim being filed or a subpoena being served.
Real Estate ProtectionPlus Coverage Option:
Subpoena assistance is a supplementary payment which means payments are not subject to the plan deductible and are paid in addition to the policy's limits of liability. Expenses will be reimbursed provided they were incurred in responding to a subpoena that the insured first receives and reports, in writing, to AXA XL during the policy period, resulting from the performance of real estate services by the insured. There is a reimbursement limit of up to $30,000 per subpoena.
Lockbox and open house coverage to full policy limits
What is a lockbox?
A lockbox is any keyless entry system or similar device on a property being shown or listed for sale while that property is in the care, custody, and control of a real estate professional.
What is an open house?
An open house is considered an advertised designated time period (up to 3 hours) where multiple potential buyers have the opportunity to view a specified property listed for sale and in the care, custody, and control of a real estate professional.
Why is lockbox coverage important?
If someone enters your listing by obtaining the lockbox code without your approval and vandalizes, steals, or destroys the property, lockbox coverage will provide defense and damage coverage.
Why is open house coverage important?
If theft or vandalism occur on a property during an open house, this coverage will reimburse damages. A homeowner's policy may cover the loss, but in the event that the homeowner (or their insurance provider) looks to the real estate professional for the loss, an errors and omissions policy will offer protection.
It is recommended that access codes for lockboxes are changed regularly to decrease the risk of unauthorized entry. If possible, an entry log with date, time, and identity of persons using the access code and entering a property should be kept up to date. Try to conduct open houses during daylight hours with a buddy. Inform co-workers of your location and scheduled hours. Make sure to bring a charged cell phone and check all rooms before and after open house hours.
Real Estate ProtectionPlus Coverage Option:
Lockbox protection is a coverage extension and provides coverage up to your policy's limits. There is no deductible for lockbox claims. Claims will be covered when any keyless entry system or similar device is in use on a property being shown or listed for sale while that property is in the insured's care, custody, and control. Open house protection is also a coverage extension providing coverage up to your policy's limits.
Mold coverage with limits beginning at $100,000
What is mold and how is it dangerous?
Mold is a type of fungi that grows in moisture-rich environments. Outdoors, it is part of the natural process of breaking down organic material, but indoors, mold can be unhealthy. It can be found on basement walls, bathroom tile, around windows, leaky pipes or faucets, or other areas.
If real estate professionals fail to disclose the existence of mold, they may be at risk of a claim. Like environmental coverage, it is always best practice to clearly disclose all issues in writing in a property transaction.
Real Estate ProtectionPlus Coverage Option:
Mold coverage limits begin at $100,000 with higher limits available. There is no additional premium charged for this valuable coverage. Keep in mind that the coverage does not extend to the costs associated with site clean-up.
Public relations advisory services
What is a potential public relations event for a real estate firm?
Events can occur within a firm resulting in negative local or national media coverage causing harm to the firm's reputation. Examples of such events include:
Businesses should have a crisis management plan in place in the event of a crisis situation
Real Estate ProtectionPlus Coverage Option:
: Expenses will be reimbursed up to $25,000 per public relations event, subject to a maximum of $50,000 per policy period up to 60 days after the public relations event occurred. It is often best to hire a public relations firm to assist in mitigating any negative impact to your firm's public image.
Fair housing discrimination claims
What are fair housing laws?
The federal Fair Housing Act prohibits any discrimination in the sale, lease, or rental of housing, or making housing otherwise unavailable, because of race, color, religion, national origin, sex, and, as amended (1988), handicap and familial status. Individual state and local laws may prohibit discrimination based on additional classes not covered by federal laws.
The National Association of REALTORS ® (NAR) opposes discrimination in housing based on race, color, religion, sex, handicap, familial status, sexual orientation, gender identity, and national origin. This policy is embodied in NAR's Code of Ethics. Review Article 10 of the Code of Ethics.
Why are fair housing laws important?
The Fair Housing Act ensures equal rights for everyone who wants to rent or own a house. The law offers protection against discrimination in property transactions (sale or rental) and covers most housing. A buyer has the right to expect that housing will be available without discrimination or other limitations. Learn more about fair housing laws.
What activities are prohibited by fair housing laws?
A real estate professional cannot discriminate in a real estate transaction based on race, color, religion, sex, handicap, familial status, or national origin. An agent may not fulfill a request by a seller/landlord or buyer to act in a discriminatory manner.
In addition, a seller (or landlord) cannot deny that housing is available or advertise the available property only to persons of a certain race, color, religion, sex, handicap, familial status, or national origin. A seller or landlord may not request a buyer or a real estate professional to place any limitations on their behalf.
As a real estate professional, you should always conduct yourself in a manner which is not discriminatory. Be courteous to all. When interviewing prospects, be consistent in asking the same questions of all potential buyers. When discussing housing availability, make sure you are consistent and document your findings. Make sure you show options in every location available. Finally, have a follow-up plan in the event you're involved in a fair housing violation complaint.
As a real estate professional, you should always conduct yourself in a manner which is not discriminatory. Be courteous to all. When interviewing prospects, be consistent in asking the same questions of all potential buyers. When discussing housing availability, make sure you are consistent and document your findings. Make sure you show options in every location available. Finally, have a follow-up plan in the event you're involved in a fair housing violation complaint.
Real Estate ProtectionPlus Coverage Option:
Fair housing discrimination coverage is included in the AXA XL policy form with a sub-limit of $250,000. Higher limits are available. This coverage extension provides defense costs and damages for civil action resulting from fair housing discrimination.
