Real Estate Errors and Omissions Insurance Terms

• A Rated:

  A term used to describe an insurance company’s financial strength and stability as rated by independent rating agencies (e.g., A.M. Best). An “A” rating signifies a high level of financial security and ability to meet policyholder obligations.

• Agent Owned Property:
  Refers to real estate owned by the insurance agent. Coverage can be specific to liabilities or issues arising from properties that the agent has an ownership interest in.
• Broad Form Endorsement:
  An endorsement that extends the policy’s coverage beyond the basic terms, providing wider protection. It can include additional risks commonly faced by real estate professionals.
• Claims Expense Outside:
  A policy feature where the costs associated with defending a claim (lawyer fees, court costs, etc.) are paid in addition to the policy limits, not deducted from them, preserving the full limits for settlement.
• Conformity Coverage:
  Ensures the policy conforms with local laws and regulations where it is issued, even if the standard policy language does not fully comply.
• Contingent Liability:
  Liability that depends on a certain event happening. In real estate, it might cover scenarios where an agent is held responsible for the actions of contractors or other third parties.
• Disciplinary Proceedings or Discipline Hearing Expense:
  Coverage for legal expenses incurred during disciplinary proceedings against the insured by a regulatory or licensing body.
• Discrimination/Fair Housing:
  Provides protection against claims alleging discrimination in housing, under laws like the Fair Housing Act, including defense costs and potential settlements.
• Escrow Disputes/Earnest Money Deposits:
  Coverage for legal costs and potential liability arising from disputes over escrow accounts or earnest money deposits in real estate transactions.
• First Dollar Defense:
  A policy feature where the insurer covers defense costs from the first dollar of expense, without a deductible or retention amount being paid by the insured.
• Franchise Coverage:
  Insurance coverage designed for real estate franchises, protecting against specific risks associated with operating under a franchise model.
• Lock Box Coverage:
  Offers protection against claims resulting from the misuse or theft of lock boxes used by real estate agents to store keys for property showings.
• Policy Limits:
  The maximum amount an insurer will pay under a policy for covered losses. This can be per claim or aggregate over the policy term.
• Pre-Paid Legal:
  A service or policy feature offering access to legal advice and representation for a prepaid fee, often providing a range of legal services at a reduced cost.
• Prior Acts/Retroactive Coverage:
  Protects against claims arising from acts that occurred before the policy was purchased but were unknown at the time of purchase.
• Retention:

  Similar to a deductible, it is the amount the insured must pay out-of-pocket before the insurance policy begins to pay. It can apply to various coverages within an E&O policy.

• Risk Management Services:

  Services provided by insurers or third parties to help businesses identify, assess, and mitigate risks to prevent claims before they occur.

• Subpoena Coverage:
  Coverage for the costs associated with responding to subpoenas in connection with professional services rendered, including legal advice and document production.
• Tail Coverage:
  An extension of coverage that allows claims to be reported after a policy has expired, for acts that occurred during the policy period. Particularly useful when switching insurers or retiring.