Understanding Your E&O Coverage
Read your policy, and 10 other things real estate broker/owners must know about E&O coverage.
(Boonton, NJ, October 20, 2015) — Errors and omissions insurance is no one’s idea of a sexy topic, but if you don’t understand your coverage, it could cost you.
That’s why Jamie Moses urges brokers to scrutinize their errors and omissions (E&O) policies.
"Become intimately aware of your policy’s language," says Moses, a Florida attorney who handles real estate litigation.
"Don’t have your insurance broker explain it to you; you need to read it word for word."
In addition, Moses encourages broker/owners to address the question of who pays the deductible.
When a former client threatens litigation and you file an E&O claim, someone has to write the check to the attorney so that you can be properly represented. Is that payment your responsibility or your agents? Most brokers split the costs with agents, Moses says, but it’s important that you have a clear policy that spells out who pays the deductible in the case of a claim.
"When that first claim comes in, you’re going to have a poor-me agent claiming they can’t pay the deductible, even though they just collected a $6,000 commission," she says.
Clear rules will help keep you and your agents on the same team in the event of a suit.
The full article, plus insights from real estate brokerages on the latest Inc. 5000 list of fastest growing companies, appears in the October issue of Real Estate Broker’s Insider.
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