Question Details

Kaley Schiltz, Real Estate Pro in Sierra Madre, CA

I'm a new agent. I wanted to know if all brokerages require agents to pay a full year of E&O insurance before they move on to a different firm.

Asked by Kaley Schiltz, Sierra Madre, CA Wed Jan 22, 2014

Since I'm new I'm quite perplexed that RE firms don't prorate you if you want to leave the firm mid-year, the brokerages ask you to pay the remindar with no expectations of refund at a prorated rate. This seems like their in the business in selling insurance too. Can someone tell me if there is another business model that offers a monthly or every 6 month premium? Thank you

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Answers

5
Is this clause in the contract you signed? There are as many models out there as there are offices. My brokerage charges per transaction for E&O. Be sure to check out several and read the contract before selecting your next office.
0 votes Thank Flag Link Thu Jan 23, 2014
Some companies provide and then it is part of "their share" of commission when you sell something. It is important to read your agreement and when interviewing simply ask their policy.
0 votes Thank Flag Link Wed Jan 22, 2014
Samuel is right, check your contractor agreement to see if it addresses your situation. In most instances, Thomas is right that insurers charge one fee at the beginning of the year and don't allow for adjustments in staffing until the start of the next year. In my E&O policy I have no way to get a refund if licensee staffing falls below the business plan forecast I provide to the insurer prior to the new year, but I am required to inform the insurance company if staffing exceeds the business plan, therefore increasing their exposure. Yes, a one way street.
I've never been offered anything but an annual premium with full payment due in advance, you may want to contact an insurer directly with your question.
0 votes Thank Flag Link Wed Jan 22, 2014
Many E&O policies charge the broker for a full year with no proration. The broker may be simply passing the cost along to you.
0 votes Thank Flag Link Wed Jan 22, 2014
Hello Kaley,

I recommend that you review your agreement with the broker that you signed before joining the firm. If that agreement states that you are required to pay a full year before leaving you may be on the hook for it. There are many models, some brokerages will charge you a flat fee per transaction. Chat with them all to compare, that is all you can do... Good luck, sam
0 votes Thank Flag Link Wed Jan 22, 2014
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