Insurance Requirements for Real Estate Agents

The real estate industry offers many opportunities and can be a rewarding line of work. First time buyers looking to secure the home of their dreams call on a professional to help navigate the landscape and make the right decisions. Unfortunately, mistakes and errors can often mar the relationship, and an insurance broker in Massachusetts needs a policy that is designed to aid professionals who may wind up on the wrong end of a claim.

Errors and omissions insurance (E&O) doesn’t cover you for a claim citing fraudulent activity. Typically this policy will defend an insured if a disgruntled buyer decides to sue an agent or broker for issues regarding the sale, including failing to disclose a defect in a property, misleading the purchaser about what exactly they are buying, or any action construed as a breach of contract.

These are just a few of the causes of litigation. Boundary disputes can be another area of concern for owners. For instance, while the property may be in good condition, the buyer may discover that the square footage of the home, or surrounding property, is in reality smaller than actually stated. Brokers and agents have found themselves being sued for failing to disclose an issue such as a property that is encumbered by a lien, which results in the property being entangled in a previous owner’s debts.

Coverage provides for financial responsibility

In the event that an agent is targeted with a claim, the insurer will pay an attorney to handle a defense strategy, or when necessary, negotiate a settlement. When an agent lacks the proper coverage, they must assume the bulk of the legal costs and any award, and typically this could wind up being hundreds of thousands of dollars, or more.

There is plenty of information about E&O insurance, as well as the differences in local laws. Have an agent help you to compare policies, as they know what to look for in the fine print. Shopping around for a policy also makes plenty of sense, and an insurance broker in Massachusetts with experience in the E&O market will find the best coverage at the best price.