Difference between General Liability vs E&O
Oct 30 , 2015
Real estate and title companies work with clients daily, which means even in an insulated office setting, you are exposed to third-party liability risks. If a visitor walks through your office doors, trips over your building's slight step, and breaks a bone, that is all the fodder they need to file a liability suit against your business. Even if your business is ultimately not at fault, you would still have to hire an attorney and account for related court costs just to defend your business. But when you have a General Liability policy in place, you don't have to worry about draining your company's account to pay for court fees.
General Liability Insurance for real estate and title professionals kicks in when a third party sustains bodily injuries or experiences property loss or damage on your business premises. Your GLI policy also accounts for your staff's culpability in these claims as well, which is handy if they ever handle your client's property on behalf of the business.
With this foundational coverage, you have the peace of mind that no matter what unexpected accidents happen on your premises, your business will have the finances to weather an otherwise costly claim. Depending on your policy limits, your GLI can take care of the costs of immediate medical attention, defense expenses, settlements or judgment fees, court expenses, and more.
General Liability: Key Details General Liability Policies for Real Estate and Title Businesses: Key Details
For real estate agents, property managers, title abstractors, and closing agents just starting to build their business protection plans, a General Liability policy is a solid foundation. It protects your business from the most common third-party claims you may face when working with the public. Keep reading to learn more about the three types of claims General Liability policies cover.
Bodily Injury Claims for Real Estate & Title Businesses
Though most real estate and title businesses are considered low-risk industries, you still benefit from the bodily injury protection your GLI policy offers. After all, you never know when a seemingly innocuous injury will escalate into a lawsuit over medical expenses and other damages. So when a slip or spill happens in your office, you can rely on your General Liability policy to kick in to cover the costs of the injured person's immediate medical attention.
If the injured person decides to pursue your business in court, your policy ensures you don't have to bear the expensive costs of defending your business. GLI can cover attorney's fees, settlements (also called "damages"), bond premiums, medical expenses, and more, up to the limits of your policy. Even if your business is not ultimately liable, your policy will still cover any costs related to the initial charges.
For extreme and rare cases where a third party dies due to their injuries, your General Liability policy can also account for medical costs, funeral expenses, and court-awarded compensation.
Real estate and title professionals will want to note that this policy will not extend to cover employees who have been injured conducting their work. For that coverage, you will need a Workers' Compensation Insurance policy in force.
Property Loss or Damage Claims for Real Estate Agents & Title Professionals
In the event that you handle your clients' property and are responsible for losing or damaging it, your General Liability Insurance can protect you if the client decides to sue for their loss. Your policy will pay for the cost of defending your business and any settlements awarded that fall within the limits of your coverage.
Title & Real Estate Businesses: Personal and Advertising Injury Claims
If your real estate or title business advertises to attract clients and grow your company, you could be exposed to risk of personal injury claims. Say, for example, a competitor alleges your business is harming their entity. Your GLI will provide funds to defend your business in court for copyright and brand infringement, libel, or slander.
Errors and Omissions Insurance for Real Estate Professionals
Real estate agents, title agents, and property managers are used to facing challenges. Between fluctuating markets and discerning clients, it takes persistence and hard work to build a successful real estate business. But there are some circumstances that no amount of tenacity can eradicate. There are some litigious folks whose reactions you have no way of controlling. So if you ever make an oversight in your work, the client who suffered a loss due to that slip could sue your business.
To address claims of professional negligence or errors, most real estate and title agents turn to their Errors and Omissions Insurance (aka Professional Liability Insurance). That way when communication breaks down or a client does not want to work through the problem any other way but through the court, your agency can survive the costly legal fees. From hiring an attorney to paying settlements, your policy will protect your business from draining its assets because of a mistake.
Keep reading to learn how E&O coverage protects your business and allows you the security you need to keep growing.
E&O Insurance: Protecting Real Estate and Title Professionals
Professional Liability or Errors & Omissions Insurance kicks in when someone alleges the services you delivered or the way you carried out your work was faulty, negligent, or incomplete. Say, for example, a client alleges you didn't disclose all the information about the property they purchased, and had they known the full history of the house, they would not have bought it. They could pursue your company for professional negligence — that is, they claim you were liable for shoddy, incomplete, or incorrect work; mistakes or oversights; or that your business failed to perform professional duties.
If such a scenario arises, your Professional Liability policy covers the cost of hiring a defense attorney and related court fees. If your business is found guilty of wrongdoing, the policy also pays for the requisite settlement or judgment expenses. In the event of a meritless claim, your coverage still protects you from the financial burden of paying attorney's fees and court expenses.
Real Estate Errors and Omissions Insurance is considered a must-have policy for professionals who deal with clients — especially when you are involved with one of the heftiest investments your clients will ever make. Most of the time, Professional Liability lawsuits are more a reflection of a person's disappointment in the outcome of a venture than they are a reflection of your work.
The times when your real estate or title agency is at fault, the insurance makes sure your business can survive the costly litigation process. However, you will need to make sure your policy is in force well before it ever comes time to file a claim and that it was in force during the incident. Most Errors & Omissions policies are "claims-made" based, which means your coverage won't kick in unless your claim happened while the policy was active and the same policy is still active when you file.
These clauses are worth noting because different states have varying statutes of limitations, meaning you could be sued for deals you closed months ago. Most real estate and title businesses choose to carry the same Professional Liability / Errors & Omissions policy throughout the life of their company to make sure they have access to this coverage any time they need it.
E&O: Key Details
Real Estate Errors and Omissions Insurance: Key Details
If your real estate or title business is on the market for a Professional Liability policy and you have questions, know that our Real Estate Specialist insurance agents are happy to help. Here are some key details that may help answer your questions as well.
Claims-Made Coverage: What It Means for Your Real Estate Business
Professional Liability policies today generally offer "claims-made" coverage. Claims-made coverage is based on two simple caveats:
- When the alleged incident occurred, your policy must be active.
- When you file your claim, your policy must also be active.
Unless your claim meets both conditions, your event will not be covered by the policy. This is why many real estate and title businesses opt to carry their same Professional Liability policy as long as their business is alive.
If you already have an Errors & Omissions policy, but you want to change carriers, you might want to purchase a "tail" policy while your business transitions between providers. If you don't have interim coverage for this period, any lawsuits filed against your business once your policy is terminated will not be covered.
Tails and Prior Acts for Coverage Gaps
If you want to change your Errors & Omissions policy in favor of a new one, your real estate or title business will not be able to file claims until your new policy kicks in. When your new policy is in force, however, it may not account for any events that occurred before its activation. To address both these issues, you may want to purchase "tail" coverage for the interim between your old and new policies and "prior acts" coverage for events that happened before your new policy began. Both of these coverages are designed to fill potential gaps in your business protection.
With tail coverage, your business can file claims during the transition period between the termination of your old policy and the activation of your new E&O policy. Prior acts coverage gives your business the flexibility to file a claim for events that happened but were not reported before you new policy came into effect. If you want to learn more about these options. please call SURE88 Insurance Brokers LLC at 408 453 8831.