Question Details

Ruthless, Other/Just Looking in 60558

What are some examples of agents' E&O insurance issues? What claims might have been turned down?

Asked by Ruthless, 60558 Tue Aug 28, 2007

Please address both buying and selling.

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Answers

4
Ruth
What interesting questions you pose!
The biggest issues Realtors encounter is what might be broadly defined as "truth in advertising" and "equal opportunity housing".

Space does not permit, however I'll give you a few choice examples:
"Totally remodeled" Really? to whose standards?
"New" appliances - never been used?
"Hardwood floors" - wood floors, or hardwood floors
"Walking distance to school" what if the buyer is confined to a wheel chair?
The list goes on We live in a very litigous society, so a well-trained Realtor can protect the seller from many errors that might result in legal entanglements.

If the Realtor writes "beautiful kitchen" instead of "totally remodeled kitchen", the buyer is not likely to sue the seller if the kitchen is not "beautiful enough"...if the kitchen is not totally remodeled, then they might have a case.
2 votes Thank Flag Link Tue Aug 28, 2007
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
Contact
A timely quetstion, Ruth. Check out this article: http://www.axisins.com/articles.asp?type=1&id=13

Common E&O Exclusions per E&O insurance facts:

Claims resulting in dishonest or criminal acts by insured
Claims associated with polluted property
Claims against you if you cause bodily harm or death to another person (Too bad. I can't tell you how many times I've wanted to strangle a client. I kid, I kid. Kinda.)
Claims arising from damage you cause to someone's property

Luckily, I've never been sued. KNOCK. ON. WOOD.
1 vote Thank Flag Link Tue Aug 28, 2007
Patti Pereyra, Real Estate Pro in Chicago, IL
MVP'08
Contact
Any time the information we provide is inaccurate it is grounds for an error suit. An example of an error would be if I misquote the square footage of the home or the school zoning. Omissions is when material information is not divulged and it’s a little trickier than an error because we, as agents, are to disclose defect information, but if a seller does not divulge the information to me, I’m not a general contractor / home inspector, so what defects should I reasonably be able to discover myself? I had a buyer one time that found out after moving in that there was trouble with the sewer drain. After the neighbors told him that it had been an on-going problem for years, he sued. Everyone.

Most E&O policies have a list of exclusions for coverage. Mold and other environmental issues are big ones for exclusion, and obviously, fraudulent / criminal acts, discrimination, mishandling of funds, stuff like that we are totally on our own.

It’s common practice here to have a blurb in MLS remarks that all information is believed to be accurate, but must be verified by the buyer.
1 vote Thank Flag Link Tue Aug 28, 2007
Because of the conversation about "becoming an agent too easy?" and Redfin, I'm posting here to put this back on the front page for more input.

When I originally asked the question it was because agents kept using it as a "sales tool" for not going FSBO.
Ruth
0 votes Thank Flag Link Sun Sep 2, 2007
Ruthless, Other/Just Looking in 60558
MVP'08
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