Real estate professionals are not medical doctors€"they sell real estate for a living, so they may be thinking that they are not working in the type of industry that would create a need for errors and omissions coverage, also known as E and O insurance. Unfortunately, that's where they would be wrong€"because malpractice can happen not only to doctors and others. This is the version of coverage that protects other professionals, including real estate agents, from financial losses that occur in the course of doing business. Realtors need this coverage because, in today's litigious climate, they, too, run the risk of being sued (whether the person's claim is frivolous or not), which means they would have to cover legal expenses, no matter who wins the lawsuit. Consider that attorneys charge an hourly rate of $150 to $300 or more, and it's easy to see that the cost of simply going to court can have a devastating financial impact. Then, what if the person who sues the Realtor wins the case? The settlement or judgment could wipe out the Realtor financially, putting not only the business at risk but his or her personal assets as well.

Policy offers protection from the real risks of buying and selling

Angela Bennett is a Realtor who can speak personally about the need for this coverage. Angela showed dozens of homes to a very hard to please couple before finally coming across a home they both liked. However, the buyers decided to forego a home inspection (against Angela's advice) in order to bypass a bidding war that was brewing for the property. A foundation issue arose a few months after the couple moved in, and they pointed an accusatory finger at Angela for not bringing this problem to light, conveniently forgetting they decided to skip the inspection. Fortunately, there's a policy that protects against the financial losses that stem from one's real estate activities should the Realtor be sued for mistakes or negligence. The policy pays for the legal expenses, including the settlement or judgment against you, up to the stated coverage limits.

Take the advice of another professional

Talk to a professional insurance agent about E and O insurance for protection from the myriad risks that abound in the course of providing professional real estate services to clients. Also, for even more protection, consider having buyers or sellers sign a document stating clearly that they either agree to or decline to follow an action recommended by their Realtor, which could be of help should a lawsuit occur down the road. Talk to an agent today to learn more.