If you’re a real estate agent, REALTOR®, or real estate professional of any kind and you’re wondering about E&O insurance, you’re in the right place. This article is for you.

After this, you’ll have all the answers you need to make informed decisions for your real estate business.

Here are the questions we’re going to address:

What is E&O insurance?
What does E&O insurance cover?
How much E&O Insurance do I need as a REALTOR®?
How much is E&O Insurance?

Let’s dive in!

What Is E&O Insurance?

“Errors and Omissions” insurance (aka “E&O insurance”) is a type of professional liability insurance designed to protect real estate professionals, such as real estate agents or REALTORS®, from potential legal claims and financial losses arising from errors, mistakes, or negligence in the course of their professional duties.

E&O insurance coverage doesn’t just protect you, the agent, broker, or franchise/firm owner. It also protects your clients.

As you generate leads and turn more and more of them into clients, eventually you’ll make a mistake. Accidents happen, even at the best firms with the best people.

Mistakes are a part of life and can be minimized but never totally eliminated. E&O insurance ensures that even if you do make a costly mistake, there will be enough cash liquidity available to compensate your clients for any damages that may arise.

Maintaining adequate coverage – and ensuring it doesn’t lapse – is part of your responsibility as a real estate professional.

E&O insurance should be considered as part of your overall risk management strategy as a real estate professional. While it offers essential protection, it’s also essential to maintain high professional standards, communicate clearly with clients, and follow best practices to minimize the likelihood of errors and omissions in your work.

What Does E&O Insurance Cover?

Doctors go through years and years of postgraduate medical school, internships, residencies and specialty training. And then they go to regular in-service training events to hone their skills and stay on top of the latest techniques and procedures in their profession.

And they still make mistakes. That’s why they carry malpractice insurance.

Yes, people look to you as a real estate professional for knowledge and expertise regarding real estate rules, regulations, laws, and procedures. That’s why you’ve got the license.

But if you’re in business as a real estate agent long enough, sooner or later you’re going to make professional mistakes too. Most of your goofs can be corrected with an apology and a signature.

But some may not be so easily corrected.

Someone may suffer some serious financial damages because of a mistake that you make as a real estate professional. Doctors need malpractice insurance. Real estate agents and other professionals need errors and omissions (E&O) insurance.

Here’s how it works.

✅ Protection from Lawsuits

E&O insurance provides coverage in case a client or a third party alleges that you made a mistake, failed to disclose important information, provided incorrect advice, or were negligent in your professional services, leading to financial harm or loss.

✅ Defense Costs

If you face a lawsuit or legal claim, the insurance will typically cover the costs of hiring a lawyer and any legal fees associated with defending your case, even if the claim is groundless.

✅ Settlements or Judgments

If the lawsuit is settled or if a judgment is entered against you, the E&O insurance can also help cover the settlement amount or the awarded damages up to the policy’s limit.

✅ Coverage Limit

E&O insurance policies have limits to the amount they will pay out, so it’s important to review and choose a policy with an appropriate coverage limit based on your specific needs and level of risk.

How Much E&O Insurance Do I Need as a REALTOR®?

The question of how much E&O insurance you need as a REALTOR® may depend on whether you’re already covered.

Unlike homeowners insurance policies, there are no “standard forms” in the E&O world. Each carrier can have very different policies.

Often the best solution is to layer two or more policies on top of one another to plug any “gaps” in coverage that may occur during career changes, moves to another state or agency, etc., and after you retire or otherwise leave the industry.

(Note: Standard commercial liability policies do not cover errors and omissions made in your professional capacity as a real estate agent or broker.)

Here Are Somethings To Take Into Consideration


Look for coverage that requires your consent before any settlement. Otherwise, again, your insurer could throw your reputation under the bus to minimize its own losses in a lawsuit.

Limit of liability

This is the maximum amount, overall, a policy will pay out, on your behalf. You may want to consider a liability umbrella policy to protect you against judgments or settlements over this limit.

Licensing Proceedings

Court costs are one thing. Will your E&O coverage also cover the costs of representing you before your state’s real estate licensing board? Check your policy.


Look over this part carefully. Exclusions aren’t necessarily bad – it’s part of what keeps insurance affordable, though you may need to line up other insurance coverage to plug any risks that fall under your E&O carrier’s exclusions.

Common exclusions include:

  • Claims arising out of activities that are beyond the normal scope of a real estate agent’s activities.
  • Anything arising from a bodily injury or property damage claim.
  • Improper commingling of funds or misappropriation of funds.
  • Deals in which you, the agent, are also the buyer or seller.

How Much Is E&O Insurance?

The good news for most rank-and-file agents is that your agency will often help subsidize the cost for you. However, if you’re an independent agent, a franchise owner or team leader, you may have to purchase coverage on your own.

The cost of E&O insurance for a REALTOR® can vary significantly based on several factors, including…

  • Geographic location: Higher population densities and litigation rates may lead to higher premiums.
  • Coverage limits: Higher limits provide more protection but result in higher premiums.
  • Deductible: Higher deductibles usually lead to lower premiums.
  • Experience and history: A clean claims record and more experience can qualify for lower premiums.
  • Brokerage size and type: Costs may vary based on the brokerage’s risk profile.
  • Individual risk assessment: Factors like transaction volume and property types influence premium rates.

Given these variables, it’s challenging to provide an exact cost. However, to give you a general idea, E&O insurance premiums for REALTORS® in the United States can range from a few hundred dollars to over a thousand dollars annually.

To find the best-suited and budget-friendly policy, it’s wise to compare quotes from different insurance providers and seek guidance from insurance agents or brokers specializing in professional liability insurance for real estate professionals.

Let’s Put This In Perspective & Consider the Costs of Defending Yourself

If you have a good errors and omissions policy, your insurance company will generally provide you with an attorney. Otherwise, you’ll have to pay an attorney out of your own pocket.

Your attorney’s fees alone can easily amount to at least $10,000, and attorney costs of $100,000 or more are not unheard of in complex cases.

If you lose, and you don’t have coverage, you’ll be on the hook not just for damages, but also for the plaintiff’s attorneys’ fees and court costs as well.

So take a good look at the language of E&O insurance policies. The more robust insurance policies will contain the phrase “right and duty to defend” or similar language.

This means that the insurance company must defend you in court. They don’t have the option of skipping the defense and settling on difficult cases, throwing your reputation overboard to cut their own losses!

Pro Tip: Plan Out Coverage Transitions

Even if you have quality coverage in place now, that’s not the end of the issue. The most critical time for insurance agents’ risk exposure is before a policy begins and after it ends.

For example, you started working at your current agency in January of last year, and you got errors and omissions insurance from your new agency when you signed on. Then, boom! In July, you get hit with a lawsuit over a deal you made last November, before you joined your current agency, and before your current errors and omissions policy became effective.

Speaking of Setting Your Business Up for Success…

Have you ever created a business plan?

If not, you may be severely limiting your growth potential.

What if this was the year you generated more leads and closed more deals than ever before? It’s possible. But only if you have a plan to follow.

Learn more and get a free downloadable real estate business plan that walks you through the process.