Real estate professionals are in the business of helping people buy or sell their homes, but with that comes a great deal of responsibility. Unfortunately, mistakes can happen and even the most experienced real estate agents can make errors that could potentially lead to costly lawsuits. That is why all real estate professionals need to have Errors & Omissions insurance. In this blog post, we will explore exactly what real estate E&O insurance is and why it is so important for people working in the real estate industry.

An Overview of Error & Omissions Insurance

Errors and omissions (E&O) insurance, also known as professional liability insurance, is a type of insurance coverage designed to protect professionals and businesses from liability claims resulting from errors, mistakes, or negligence in the services or advice they provide to clients. It provides financial protection in case a client alleges that you made a mistake, failed to perform a duty, or provided inadequate or incorrect advice, which led to financial loss or harm.

What is Real-estate Errors & Omissions Insurance?

Real Estate Errors & Omissions (E&O) Insurance is a specialised form of Errors & Omissions insurance designed to protect individuals and companies operating in the real estate industry. It provides coverage for claims arising from errors, omissions, or negligence in the performance of real estate-related professional services. Real estate professionals, such as real estate agents, brokers, property managers, appraisers, and mortgage brokers, can benefit from this insurance coverage.

What does Real Estate Errors & Omissions Insurance cover?

Real Estate Errors & Omissions Insurance provides coverage for a wide range of risks and liabilities that real estate professionals may face in their line of work. While specific coverage can vary depending on the insurance policy and provider, here are the key areas that Real Estate E&O Insurance typically covers:

  • Professional Negligence: This coverage protects real estate professionals against claims arising from errors, omissions, or negligence in the performance of their professional duties. It includes mistakes or failures related to property valuation, disclosure of property defects, contract preparation, documentation errors or failure to meet professional standards.
  • Misrepresentation and Fraud: Real Estate E&O Insurance covers claims resulting from allegations of misrepresentation, fraudulent acts, or misleading advertising by real estate professionals. This can include misrepresenting property conditions, misleading statements about property value or market conditions or any intentional or unintentional misrepresentation that leads to financial losses for clients.
  • Breach of Duty: If a real estate professional fails to fulfil his fiduciary duties or contractual obligations to clients, Real Estate E&O Insurance can provide coverage. This includes claims related to breaches of confidentiality, conflicts of interest, or failure to act in the best interests of clients.

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  • Failure to Disclose: Real estate professionals have to disclose material facts and defects about a property to potential buyers or tenants. Failure to disclose such information can result in legal claims. Real Estate E&O Insurance covers claims arising from alleged failure to disclose material information that subsequently leads to financial losses or harm to clients.
  • Errors in Documentation: Real estate transactions involve a substantial amount of documentation, including contracts, agreements, and disclosures. Real Estate E&O Insurance covers errors or omissions in these documents that may lead to legal disputes or financial losses for clients. It includes claims related to incorrect or incomplete information, mistakes in contract terms, or failure to include necessary provisions.
  • Legal Defence Costs: Real Estate E&O Insurance typically covers the costs associated with legal defence in the event of a claim or lawsuit. This includes lawyer fees, court costs, expert witness fees and other related expenses. Coverage for legal defence ensures that real estate professionals have the necessary resources to defend themselves against allegations, even if the claims are ultimately unfounded.
  • Loss of Reputation cover: The insurance may include coverage for reputation management expenses, such as public relations and crisis communication services. This coverage helps protect and restore the professional reputation of real estate professionals in the event of a covered claim, ensuring that they can address any reputational damage effectively.

It is important to review the specific terms and conditions of the Real Estate E&O Insurance policy, as coverage limitations, deductibles, and exclusions may apply. Real estate professionals should consult with an insurance provider or broker who specialises in Real Estate E&O Insurance to understand the details of their coverage and ensure it aligns with their specific needs and potential risks in the industry.

Common exclusions in real estate Errors & Omissions Insurance

There are a variety of exclusions in real estate errors & omissions insurance policies. Some of the most common situations where coverage is not provided are:

  • Criminal or dishonest acts committed by the agents.
  • If an agent makes a false claim about the property.
  • Fraudulent behaviour at any stage of the process
  • An agent intentionally harms someone else's property or bodily harms a third party

Why is Real Estate E&O insurance beneficial for real estate professionals?

Real Estate Errors & Omissions Insurance is beneficial for real estate professionals for several compelling reasons:

  • Provides Financial Protection: Real estate transactions involve significant financial investments. Any errors, omissions, or negligence in the professional services provided can lead to substantial financial losses for clients. Real Estate E&O Insurance provides financial protection by covering legal defence costs, settlements, judgments, and damages awarded against the insured. This coverage helps protect from financial risks associated with potential claims and lawsuits.
  • Helps in Risk Mitigation: Despite their best efforts, real estate professionals can make mistakes or encounter situations where clients perceive errors or omissions in their services. Real Estate E&O Insurance acts as a proactive risk management tool, allowing professionals to transfer a portion of the professional liability risks to the insurance provider. By having this coverage in place, real estate professionals can focus on their work with greater peace of mind, knowing they have a safety net against unexpected claims and potential financial liabilities.
  • Helps maintain Professional Reputation: Reputation is crucial in the real estate industry. A single professional liability claim, even if unsubstantiated, can tarnish a real estate professional's reputation and undermine client trust. Real Estate E&O Insurance includes coverage for reputation management expenses, such as public relations and crisis communication services. This coverage helps protect and restore the professional reputation of real estate professionals in the event of a covered claim, allowing them to respond effectively to allegations and demonstrate their commitment to rectifying issues, if any.
  • Helps Maintain Client Confidence and Trust: Real estate transactions involve significant financial and emotional stakes for clients. By carrying Real Estate E&O Insurance, professionals can instil confidence and trust in their clients. The coverage showcases their commitment to professionalism, accountability, and financial protection for clients. Clients are more likely to engage with real estate professionals who have adequate insurance coverage, as it provides assurance that they have suitable recourse in case of errors or negligence.
  • Helps Ensure Compliance With Legal or Statutory Requirements: In some jurisdictions, carrying Real Estate E&O Insurance is a legal requirement for practising as a real estate professional. Regulatory bodies or licensing authorities may mandate proof of insurance as a condition for obtaining or renewing licenses. Real Estate E&O Insurance helps professionals meet these legal obligations and maintain compliance with industry regulations. Also, by maintaining compliance with such obligations, real estate professionals can ensure their professional standing and avoid potential penalties or disciplinary actions.
  • Enhances Professional Advancement and Opportunities: Many real estate companies and organisations require real estate professionals to carry E&O Insurance as a condition for employment or affiliation. Having Real Estate E&O Insurance enhances professional credibility and opens doors to opportunities within the industry. It allows professionals to qualify for partnerships, join reputable brokerages, and engage in a wider range of real estate transactions.


Errors and Omissions Insurance is a must-have for any real estate professional. It provides the peace of mind that no matter what, they will be covered if something unexpected were to happen. This type of insurance helps protect against financial losses due to negligence or errors made while providing services. For those who are in the business of helping others buy and sell homes, it is essential to have this coverage as part of their portfolio. For more information related to Real Estate Errors & Omissions Insurance or on any topic related to insurance for that matter, you may contact BimaKavach. Here, you can also get the best recommendation for any insurance product in just 5 minutes.