Real Estate Agents Errors & Omissions Liability

Transcription

1 Real Estate Agents Errors & Omissions Liability Why yo need Real Estate Errors and Omissions Coverage? Low mortgage rates have enabled more people to prchase homes. The rising nmber of transactions increases the likelihood of an error or a claim occrring Real Estate agents are often named in sits for failing to disclose defects with a property even if they are not at falt. Defense costs from sch a claim can cripple yor bsiness Claims of discrimination are on the rise. These claims are more severe than claims of negligence or failre to disclose defects. Defense costs for this kind of claim average over $100,000 HUD/State Commissions of Hman Rights are actively going after real estate agent. Every day testers are going to real estate offices to see how a real estate agent reacts to the same reqests asked by someone who is and someone who is not a member of a protected class Real Estate agents owe a dty of care to their client to be loyal and to disclose all pertinent information or conflicts of interest. Most claims against real estate agents allege that these dties were not flfilled Why yo shold place coverage with United States Liability Insrance Grop s Real Estate Agents E&O Policy The following are important coverages to have in yor policy. Check to make sre yo have all of these featres Coverage Featres Or Grop Competitors Policy $250,000 Coverage for allegations of Discrimination. Coverage inclded for Damages and Defense Costs Lockbox coverage $50,000 inclded Open Hose coverage $50,000 inclded* Coverage for the sale of all owned Residential Property not developed or constrcted by an Insred Internet Coverage provided Coverage for Personal Injry Defense Costs otside the Limit of Liability for Professional Services Claims Environmental Coverage Available Preferred Package providing coverage for bodily injry claims arising from professional services A.M. Best rated A++ carrier *Pending in MN Why choose to be insred with United States Liability Insrance Grop? One of only 20 A++ rated insrance grops in the United States by A.M. Best. A prod member of the Berkshire Hathaway Grop, recently voted the #1 most admired Property & Casalty Company in the world (Fortne Magazine 2004). Insre yor financial well-being with a stable Company that will be there to pay yor claim. This docment does not amend, extend or alter the coverage afforded by the Policy. For a complete nderstanding of any insrance yo prchase, yo mst first read yor Policy, Declaration Page and any Endorsements and discss them with yor Broker. A specimen policy is available from an Agent of the Company. Yor actal Policy Conditions may be amended by Endorsement or affected by State Laws. REA-POS-03/11

2 Real Estate Agents Errors & Omissions and Professional Office Package We offer Real Estate Agents Errors & Omissions coverage for real estate firms which derive at least 65% of their commission income from residential real estate. We can consider acconts with p to $5,000,000 in commission income. Coverage Featres: Named perils coverage for claims arising from internet and Defense Otside the Limit $250,000 Discrimination coverage (defense and damages) $50,000 Lockbox coverage $50,000 Open Hose coverage Coverage for Personal Injry Coverage for sale of all owned and residential property not developed/constrcted by the Insred $2,500/$5,000 for defense of insreds at local and state real estate boards Environmental coverage available Ability to provide Preferred package. Incldes coverage for Bodily Injry arising ot of professional services Limits of Liability: Primary limits available p to $5,000,000 Program Availability: Contact s for an application and specimen policy Additional Advantages: A.M. Best rated A++ carrier Low minimm premim Admitted in most states This docment does not amend, extend or alter the coverage afforded by the Policy. For a complete nderstanding of any insrance yo prchase, yo mst first read yor Policy, Declaration Page and any Endorsements and discss them with yor Broker. A specimen policy is available from an Agent of the Company. Yor actal Policy Conditions may be amended by Endorsement or affected by State Laws. REAE&O-NR 3/11

3 Real Estate Errors & Omissions Claim Examples As part of her representation services, a realtor prepared a mock closing statement for a client. This statement was meant as a gide for her clients to se to calclate the amont of cash needed to prchase a property in their price range. The statement contained errors, casing the byer to save less than needed to close on the home. As a reslt, the sale did not go throgh at closing de to lack of fnds. The byer sed for misrepresentation. A minority cople was relocating and sed a real estate agent who they discovered on the Internet. The clients flew into the area to take a look at homes and discovered that they were only being shown homes in areas predominately inhabited by minorities. When they asked if these were the only homes available that fit their criteria and price range, the realtor stated that these were the only properties available. Upset by this, the cople retained the services of another realtor. They discovered that there were many other properties available and sed the original realtor for discrimination. A cople prchased an existing property and then after closing, discovered that there was termite damage that had not been disclosed. After getting a large repair estimate, they sed the realtor for failing to disclose this information. A cople conslted a real estate broker to prchase a residence in which they cold also rn a day care bsiness. The broker made inqiries and showed them a townhose, which they eventally prchased. After closing, the cople was told by the townhose association that they were forbidden to se of the property for a daycare bsiness. The cople filed sit for negligence. A cople asked their realtor which school district the residence was located in. The real estate agent mistakenly told the cople the wrong school district. The cople prchased the property and discovered that their children were to attend a different/inferior school district. They sed this realtor for misrepresentation. A cople prchased an existing property and then after closing, discovered there were high levels of radon in the hose. Not wanting to risk the health of their two asthmatic children they immediately pt the hose p for sale and disclosed the radon levels. As a reslt, they can only get $200,000 of the $235,000 they paid for the hose. They se their realtor for not disclosing the radon levels and for their $35,000 loss. Covered nder the Environmental Polltants Coverage Damages and Defense. This docment does not amend, extend or alter the coverage afforded by the Policy. For a complete nderstanding of any insrance yo prchase, yo mst first read yor Policy, Declaration Page and any Endorsements and discss them with yor Broker. A specimen policy is available from an Agent of the Company. Yor actal Policy Conditions may be amended by Endorsement or affected by State Laws. RSE&O-CLA 2/12

4 Real Estate Errors & Omissions - All States Applicant may qalify for an INSTANT QUOTE by completing Section I below. Section II answers (and Section III if package is desired) will be reqired prior to binding and are sbject to nderwriting approval. I. INSTANT QUOTE INFORMATION Instant qote is not available for acconts with losses in the past 5 years. If there is a loss history, please complete Section I. and sbmit details in a claim spplement. Applicant s name: Location address: Same as mailing City: State: Zip code: Web address: address of primary contact: Total nmber of real estate agents/brokers/property managers/independent contractors: Fll time Part time Gross commission income breakdown: Residential sales $ Commercial sales $ Raw land sales $ Residential property management/leasing $ Residential vacant land sales $ Appraisals/Broker price opinions $ Commercial property management/leasing $ Commercial vacant land sales $ Conslting $ Other (please specify) $ Is the applicant affiliated with a franchise? Yes No II. UNDERWRITING INFORMATION 1. Has the applicant s principal or managing partner been either a licensed agent for a minimm of five years or a licensed broker for a minimm of two years? Date bsiness established. Yes No 2. Please advise if more than 10% of the income is derived from any of the following: a) constrction/development activities Yes No b) sale, management or leasing of properties constrcted/developed by the applicant or any related entity Yes No c) from the sale of agent owned properties Yes No d) sale of real estate at any one location or development (sbdivision) or one bilder/ developer Yes No e) from real estate actioneering, bsiness brokering and/or referral services Yes No 3. Is more than 25% of income derived from foreclosre sales/reo/short sales? Yes No 4. Do yo derive income from any activitiy/profession other than from the scope of a real estate organization? Yes No if Yes, please advise details: 5. Do more than 50% of the applicant s transactions involve services as a dal agent? Yes No 6. Does the average vale of properties sold exceed $600,000? Yes No 7. Expiring insrance information: Carrier: Limits: Retention: Premim: Retroactive date: (Attach a statement of details for all yes answers to the following qestions) 8. Has any person proposed for insrance had his/her license revoked, sspended, been fined, or been sbject to any disciplinary action or investigation by any real estate association, state licensing board or other reglatory body? Yes No 9. Has the applicant been the sbject of any reportings/complaints to a Better Bsiness Brea, Federal Trade Commission or any other consmer protection grop? Yes No 10. Has any policy for Real Estate Agents E&O Insrance ever been cancelled or non-renewed? Yes No (Do not answer if applicant is located in Missori) 11. Within the last five years, has any claim been made or sit broght against the applicant, its predecessor(s) in bsiness, or any of its present or former owners, partners, officers, directors, employees or independent contractors? If Yes, complete USLI Claim Spplement for each claim. Yes No REA 02/10- United States Liability Insrance Grop page 1 of 3

5 12. Is any owner, partner, officer, director, employee, or independent contractor aware of any circmstance, allegation, contention or incident which may reslt in a claim being made against the applicant, its predecessor(s) in bsiness, or any of its present or former partners, owners, officers, directors, employees or independent contractors? If Yes, complete USLI Claim Spplement for each claim. Yes No III. BUSINESSOWNERS PACKAGE INSURANCE 1. Has the applicant had any general liability or property claims paid, reserved, or pending in the last five years? Yes No If Yes, provide details: 2. Does the applicant want any additional insred(s) inclded on general liability? Yes No If Yes, attach details inclding name, relationship to applicant and address. 3. Personal property limit inclding compter hardware (at 80% coinsrance/replacement cost): 4. Bilding characteristics a) Are fnctioning brglar alarms present? Yes No b) Is all electrical wiring connected to fnctional and operational circit breakers? Yes No c) Are there fnctioning smoke and heat detectors in all nits and/or occpancies? Yes No d) Is alminm wiring present in the bilding? Yes No 5. Property protection class (1-10): 6. Bilding constrction (please check one): Frame - Bldg. is made from a wood frame (2x4 s/veneers) Joisted masonry - Otside walls are constrcted with bricks/cinder blocks. Roof is made of wood. Masonry non-combstible - Same as joisted masonry except roof is steel. Fire resistive - Strctral steel framing, reinforced concrete otside/load bearing walls. IV. ADDITIONAL APPLICANT INFORMATION Applicant s mailing address: City: State: Zip: Arizona Notice: Misrepresentations, omissions, concealment of facts and incorrect statements shall prevent recovery nder the policy only if the misrepresentations, omissions, concealment of facts or incorrect statements are; fradlent or material either to the acceptance of the risk, or to the hazard assmed by the insrer or the insrer in good faith wold either not have issed the policy, or wold not have issed a policy in as large an amont, or wold not have provided coverage with respect to the hazard reslting in the loss, if the tre facts had been made known to the insrer as reqired either by the application for the policy or otherwise. Minnesota Notice: Athorization or agreement to bind the insrance may be withdrawn or modified only based on changes to the information contained in this application prior to the effective date of the insrance applied for that may render inaccrate, ntre or incomplete any statement made with a minimm of 10 days notice given to the insred prior to the effective date of cancellation when the contract has been in effect for less than 90 days or is being canceled for nonpayment of premim. Missori & Rhode Island Disclosre Notice: I nderstand and acknowledge that as respects Discrimination and Lock Box coverage that Claims Expenses are a part of the Limit of Liability. This means that Claims Expenses will redce my limits of insrance and may exhast them completely and shold that occr, I shall be liable for any frther Claims Expenses. Claims Expenses are as defined in Section VII. I also nderstand that the Limit of Liability for the Extended Reporting Period, if applicable, shall be a part of and not in addition to the limit specified in the Policy Declarations. New York Disclosre Notice: This policy is written on a claims made basis and shall provide no coverage for claims arising ot of incidents, occrrences or alleged Wrongfl Acts or Wrongfl Employment Acts that took place prior to retroactive date, if any, stated on the declarations. This policy shall cover only those claims made against an insred while the policy remains in effect for incidents reported dring the Policy Period or any sbseqent renewal of this Policy or any extended reporting period and all coverage nder the policy ceases pon termination of the policy except for the atomatic extended reporting period coverage nless the insred prchases additional extend reporting period coverage. The policy incldes an atomatic 60 day extended claims reporting period following the termination of this policy. The Insred may prchase for an additional premim an additional extended reporting period of 12 months, 24 months or 36 months following the termination of this policy. Potential coverage gaps may arise pon the expiration for this extended reporting period. Dring the first several years of a claimsmade relationship, claims-made rates are comparatively lower than occrrence rates. The insred can expect sbstantial annal premim increases independent overall rate increases ntil the claims-made relationship has matred. Virginia Notice: This Policy is written on a claims-made basis. Please read the policy careflly to nderstand yor coverage. Yo have an option to prchase a separate limit of liability for the extended reporting period. If yo do not elect this option, the limit of liability for the extended reporting period shall be part of the and not in addition to limit specified in the declarations. If yo have any qestions regarding the cost of an extended reporting period, please contact yor insrance company or yor insrance agent. Statements in the application shall be deemed the insred s representations. A statement made in the application or in any affidavit made before or after a loss nder the policy will not be deemed material or invalidate coverage nless it is clearly proven that sch statement was material to the risk when assmed and was ntre. Colorado Frad Statement: It is nlawfl to knowingly provide false, incomplete, or misleading facts or information to an insrance company for the prpose of defrading or attempting to defrad the company. Penalties may inclde imprisonment, fines, denial of insrance, and civil damages. Any insrance company or agent of an insrance company who knowingly provides false, incomplete, or misleading facts or information to a policyholder or claimant for the prpose of defrading or attempting to defrad the policyholder or claimant with regard to a settlement or award payable from insrance proceeds shall be reported to the Colorado division of insrance within the department of reglatory agencies. District of Colmbia Frad Statement: WARNING: It is a crime to provide false or misleading information to an insrer for the prpose of defrading the insrer or any other person. Penalties inclde imprisonment and/or fines. In addition, an insrer may deny insrance benefits if false information materially related to a claim was provided by the applicant. Florida Frad Statement: The following statement applies if yo prchase a policy with Mont Vernon Fire Insrance Company which is or srpls lines carrier in Florida. Yo may review yor qote or contact yor agent or broker to verify if yor coverage is with the srpls lines carrier. Yo are agreeing to place coverage in the srpls lines market. Sperior coverage may be available in the admitted market and at a REA 02/10- United States Liability Insrance Grop page 2 of 3

6 lesser cost. Persons insred by srpls lines carriers are not protected nder the Florida Insrance Garanty Act with respect to any right of recovery for the obligation of an insolvent nlicensed insrer. Kentcky Frad Statement: Any person who knowingly and with intent to defrad any insrance company or other person files an application for insrance containing any materially false information or conceals, for the prpose of misleading, information concerning any fact material thereto commits a fradlent insrance act, which is a crime. Maine and Washington Frad Statement: It is a crime to knowingly provide false, incomplete or misleading information to an insrance company for the prpose of defrading the company. Penalties may inclde imprisonment, fines or a denial of insrance benefits. New Jersey Frad Statement: Any person who incldes any false or misleading information on an application for an insrance policy is sbject to criminal and civil penalties. New York Frad Statement: Any person who knowingly and with intent to defrad any insrance company or other person files an application for insrance or statement of claim containing any materially false information, or conceals for the prpose of misleading, information concerning any fact material thereto, commits a fradlent insrance act, which is a crime and shall also be sbject to a civil penalty not to exceed five thosand dollars and the stated vale of the claim for each sch violation. Ohio Frad Statement: Any person who, with intent to defrad or knowing that he is facilitating a frad against an insrer, sbmits an application or files a claim containing a false or deceptive statement is gilty of insrance frad. Oklahoma Frad Statement: WARNING: Any person who knowingly, and with intent to injre, defrad or deceive any insrer, makes any claim for the proceeds of an insrance policy containing any false, incomplete or misleading information is gilty of a felony. Pennsylvania Frad Statement: Any person who knowingly and with intent to defrad any insrance company or other person files an application for insrance or statement of claim containing any materially false information or conceals for the prpose of misleading, information concerning any fact material thereto commits a fradlent insrance act, which is a crime and sbjects sch person to criminal and civil penalties. Tennessee and Virginia Frad Statement: It is a crime to knowingly provide false, incomplete or misleading information to an insrance company for the prpose of defrading the company. Penalties inclde imprisonment, fines and denial of insrance benefits. Vermont Frad Statement: Any person who knowingly presents a false or fradlent claim for payment of a loss or benefit or knowingly presents false information in an application for insrance may be sbject to fines and confinement in prison. Frad Statement (All Other States): Any person who knowingly presents a false or fradlent claim for payment of a loss or benefit or knowingly presents false information in an application for insrance is gilty of a crime and may be sbject to fines and confinement in prison. If yor state reqires that we have information regarding yor Athorized Retail Agent or Broker, please provide below. Retail agency name: License #: Main agency phone nmber: Agency mailing address: City: State: Zip code: The signer of this application acknowledges and nderstands that the information provided in this Application is material to the Insrer s decision to provide the reqested insrance and is relied on by the Insrer in providing sch insrance. The signer of this application represents that the information provided in this Application is tre and correct in all matters. The signer of this Application frther represents that any changes in matters inqired abot in this Application occrring prior to the effective date of coverage, which render the information provided herein ntre, incorrect or inaccrate in any way will be reported to the Insrer immediately in writing. The Insrer reserves the right to modify or withdraw any qote or binder issed if sch changes are material to the insrability or premim charged, based on the Insrer s nderwriting gides. The Insrer is hereby athorized, bt not reqired, to make any investigation and inqiry in connection with the information, statements and disclosres provided in this Application. The decision of the Insrer not to make or to limit any investigation or inqiry shall not be deemed a waiver of any rights by the Insrer and shall not estop the Insrer from relying on any statement in this Application in the event the Policy is issed. It is agreed that this Application shall be the basis of the contract shold a policy be issed and it will be attached and become a part of the Policy. Applicant s signatre: Title: Date: Principal, Partner, or Officer of the Firm REA 02/10- United States Liability Insrance Grop page 3 of 3