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Real Estate Errors & Omissions

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A typical house in foreclosure doesn’t just come with a lower price tag, it can also come with plenty of problems that need to be addressed.

Still, these homes are often in high demand, making the offer period much shorter and creating a fast-paced market that makes some of the essentials easy to forget.

One such essential is a home inspection. In conventional cases, this is a no brainer, but in a rushed environment, it may be overlooked. Whose problem is it when carpenter ants invade the kitchen of the previously foreclosed home? Usually that fault lies with the homebuyer who neglected to have the home inspected. But unless the real estate agent has a waiver stating that they advised the buyer to have a home inspection, those ants can become the agent’s problem too. With home foreclosures continuing to skyrocket, it is more important than ever to make sure your clients in the real estate business are protected.

Burns & Wilcox recently launched a new and exclusive REAE&O product through its partnership with Markel. This product is available on a broad range of residential and commercial real estate industry accounts, and it’s designed for real estate brokers, agents, property managers, leasing agents, brokers price options (BPOs), escrow agents, auctioneers, consultants, referral agents, and business brokers. It’s a unique program with exclusive features and specialized coverages, including open house liability as well as network information and security offense. The program is non-admitted and available in most states. What’s more, it’s backed by a Risk Management Hotline that all policyholders can use at no additional charge, giving a real estate broker or agent access to legal advice that may help ward off a potential claim.

While many people use insurance as a safety net, they don’t realize that it may not be there to catch them. Depending on the type of coverage and statute of limitations in the specific state, a past policy may not protect the insured in the present — even if the policy was in place at the time of the incident. It is a common misconception that a policy that was in place in 2003 will protect the insured from an incident that occurred in 2003. Oftentimes a lawsuit is not filed immediately following the event; it may take years to put together, and by that time, it’s unlikely the previous policy will cover the loss.

“A lot of companies are downsizing and looking at expenses that can be cut, but now is not the time for real estate agents to consider dropping their Real Estate E&O policy,”says Rochelle Elliott, Director of the Burns & Wilcox Real Estate Center of Excellence. “Recently, agents have had to deal with different types of transactions — foreclosures, shortsales, etc. — that have been occurring more frequently in the market. These types of transactions have a higher chance of making customers unhappy. Consumers have become more educated and savvy, so their expectations are higher. That’s why it is in the best interests of the agent and agency to maintain Real Estate E&O coverage.”

Maintaining Real Estate E&O Coverage on a continuous basis can protect agents from many different types of claims. During these unsettled economic times, your realtor clients need your help putting their safety nets firmly in place to protect them now and in the future.

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