Lawsuits can be filed against real estate agents and brokerages, no matter how carefully they perform their job. The lawsuits might be unfounded or frivolous, but legal expenses must be paid no matter who wins in court. These costs can be devastating to a broker’s finances.
Fortunately, in the event that claims do arise, real estate brokers can have protection. With a Professional Liability Insurance program tailored to real estate brokers, these professionals can ensure that they will be covered and be able to move through the process quickly and efficiently.
Professional Liability Insurance for Real Estate Brokers
Professional liability insurance helps real estate brokers to avoid coming out of pocket for legal fees, covering claims relating to error, omission, or negligence related to a broker’s duties. The insurance company defends the claim when professional liability insurance for real estate brokers is obtained, taking care of the settlement against them to the limits of liability stated in the policy. The coverage protects real estate professionals against financial losses from lawsuits filed as a result of their work in the real estate profession. It is commonly required by law to have this coverage in order to receive and maintain licenses.
Some professional liability insurance policies designed for real estate brokers have two deductibles, such as one for defense costs and another for payment of damages if you are found to be at fault.
Preventing Professional Liability Claims
Chances are that a client will also file a lawsuit against the brokerage if they file a lawsuit against a real estate agent. Keep accurate records of all transactions and interactions with clients in defense of these issues. Document client names, dates of interactions, and topics of conversation. Take detailed notes during the conversation when speaking with clients on the phone, recording the client’s responses to documents, as well as statements made by lenders, the home inspector, and any home warranty recommendations. You must feel comfortable asking clients to sign documents stating specific actions were recommended to them and that the client did or did not agree to.
One possible scenario is a buyer who is declining a home inspection, then coming to the broker if the air conditioning breaks down on move-in day. The broker is covered appropriately if the buyer has signed a waiver showing that a home inspection was recommended to them and they declined.
Document as many facts as possible during transactions to help down the road if a client later becomes unhappy about some aspect of the sale. It can even be helpful to keep records of all text messages and a file of every email.
About Bozzuto & Co. Insurance Services, Inc.
Bozzuto & Company Insurance Services has provided business and personal insurance solutions to clients throughout California since its founding in 1981. Our experienced staff understands the unique needs that each person has when insuring their lives and their businesses, and we pride ourselves on our deeply personal customer service. We are happy to help you through every step of the insurance selection process. Contact us today at (800) 400-6394 to learn more about what we can do for you.