What Is Liability Insurance?

In real estate, property and brokerage owners or their agents and in-house brokers are the ones who will be greatly affected when issues arise. Therefore, most real estate professionals and businesses will have liability insurance. This will cover and protect their assets in case a third party wants to make a claim for wrongful acts (such as negligence, errors, or omissions).

Generally speaking, a liability insurance is any kind of insurance policy that protects a person or a business entity from various risks (such as errors due to malpractice, injury, or negligence), which may hold them liable to be sued in court. This protection will cover both legal costs and reimbursements in case the insured is proven legally accountable.

Errors and Omissions Insurance

In real estate, liability insurance comes with what is called “ Errors and Omissions” insurance or simply E&O. It is described as a type of malpractice insurance coverage for agents in the industry.

Directors and Officers Insurance

Another type of liability insurance is the Directors and Officers or the D&O insurance coverage which gives protection to directors and officers of real estate companies against lawsuits due to erroneous investment decisions, failure to function, breaching of information, and even internal issues.

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Other types of liability insurance that any real estate professional must carry are:

  • Employer’s liability and workers’ compensation
  • Commercial liability insurance
  • Indemnity insurance
  • Comprehensive general liability insurance
  • Umbrella liability policy (usually needed when coverage limits of other insurance policies are reached)


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