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Essential Components of an Insurance Plan for Real Estate Professionals

by John Torvi, Vice President of Marketing & Sales, Herbert H. Landy Insurance Agency | Nov 01, 2017

The backbone of any professional insurance program for a real estate practice is Errors & Omissions Insurance. This may be the one policy that any real estate firm might require. Simply put, E&O protects a business against allegations of an error or omission in the performance of providing a professional service. Such allegations could include a factual error, a contract violation, failure to perform in a timely manner, Fair Housing or discrimination issues or other error in providing or not providing services. Errors & Omissions may also be the most complex type of policy to consider due to its’ numerous conditions and features. Some of the most important include: 

Claims Made Policy & Prior Acts Dates
 – A professional liability (E&O) policy responds when a claim is made against the policy holder, not when the professional service was performed. The policy will respond if the professional service was performed after the prior acts (or retroactive) date on an in-force policy. A lapse in coverage may jeopardize your prior acts coverage, so it is important to renew the policy on time, but note that 
a change in insurance companies should not threaten your prior acts date as long as there is no coverage gap.  

Definitions of Who Is Covered, Professional Services, and Exclusions – Policies contain specific language about who is covered, how professional services are defined, and what is not covered. All should be reviewed to determine if any part of a practice falls outside of the parameters of coverage.  

Extended Reporting Periods – Professional liability regarding a service you performed may not end if one closes the business, retires, or even passes away. Extended reporting period options, listed in most policies, will extend coverage from your prior acts date to a defined time into the future should a claim arise after the closure of a business.  


An exponentially increasing concern is data breach and cybercrime. There are numerous policy options to respond to these problems, with better and less expensive coverage becoming more available. Privacy/data breach insurance provides coverage should a business’s data be compromised or held for ransom.  It can reimburse for notification costs, required credit monitoring, data forensics and restoration, crisis response, first 
and third person liability suits and other liabilities that might cost a firm tens or hundreds of thousands of dollars to manage on their own. Cybercrime coverage protects a business if escrow or trustee funds are misappropriated by wire fraud, social engineering, or some other fraudulent act.  


These policies, called BOP’s, combine the features of a general liability policy and business equipment protection into one package. The general liability portion protects a business if there is bodily injury or property damage incurred as a result of interacting with a business – i.e. a client slips and falls while showing a property, or as a result of a door or window being left open, resulting in vandalism or theft.  Even if there is a “home-based” business, the real benefit of this coverage is off-premises, while in someone else’s property. BOP’s are quite broad, and may also cover things like employee dishonesty, valuable papers, business interruption, hired/non-owned auto, and much more.  

Coverage is mandated in all states if a business has any W2 employees and may include or exclude independent contractors.   

This represents the foundation of a solid insurance program. There are other policies that might be appropriate for some, and consultation with an insurance representative knowledgeable in your profession’s insurance needs is recommended to obtain the coverage you need to best represent your practice.