Wednesday, July 14, 2010

E&O Insurance/Tips For Brokers/Agents

For real estate brokers/agents:

1. Hold your home as tenants by the entireties.

2. Place a car insurance rider on your vehicle that covers clients.

3. Put into place policies and procedures that all agents must follow on each and every listing.

4. As a Broker, take an active role in all listings.

5. As a Broker, put into place continuous training and quality improvement.

6. Should a "wronged" party contact you, be professional, and get the facts.

7. No matter how right you think you are, Always MEDIATE before you attempt to litigate.

8. Should you list a home that does not have home owner's insurance on it -- place a warning in the MLS.

9. Always make sure you know who you are talking to when you give that code to enter the home or location of a key over the phone.

10. Insurance companies are not the same. Some are easy to work with and others will do all they can to keep from paying you.

11. Most E & O companies will take the path that costs them the least amount of money.

12. Make sure your insurance has the right numbers. For example. If you have experienced well trained agents and you are only selling $5,000 lots that have been surveyed and each lot has title insurance with a General Warranty Deed and each lot is not in some sort of hazard zone, purchasing an E & O policy of $500,000 just may be a waste of money. Why? Most E & Os have a deductible of about $5,000.

13. Should you have many assetts, consider an umbrella policy.

14. Make sure all solo buyer agents are Accredited Buyers Represenatives.

Here are a some points to look into relating specifically to your E&O policy:

Owned property coverage - Are you covered if you or your agents sell personal property - Do you sell your own investment property also and are you covered for that? Do you manage your own properties?
Lock box - Do you have a sublimit? Full limits are better but make sure you have the coverage.
Disclosure of pollutants - Same here, do you have a sublimit? Full limits are better but make sure you have the coverage.
Tenant discrimination for property managers - sublimit? full limits?
Personal Injury - Wrongful entry or eviction, Trespass, Other invasion of right of private occupancy

** Watch for referral exclusions - we have recently seen companies excluding coverage if a claim arises from your referal of a client to an escrow company, mortgage broker, etc. Many agents consider that part of their customer service.

** Watch for sub-prime exclusions - they can be very broad

Vendor(s): PEARL

For life agents: (CNA)