Why should I choose CSI as my broker?
There are no “standard” policy wordings for E&O insurance coverage. Each policy must be read carefully to make sure that the coverage being offered fits your exposures. There is no “one size fits all” E&O policy. That is why it is very important to select a specialty insurance brokerage that understands E&O coverage marketplace.

CSI is one of California's leading E&O insurance brokers. We have access to EVERY major insurance carrier in the Real Estate E&O space. We have personal relationships with Real Estate E&O underwriters, claims adjusters, and Senior Management. As the exclusively endorsed C.A.R. P&C Broker, CSI has been able to and will continue to secure policy coverage enhancements and deductible/premium reductions for CAR members.

What is E&O Insurance?
Errors & Omissions (E&O) is the insurance that covers your company, or you individually, in the event that a client holds you responsible for a service you provided, or failed to provide, that did not have the expected or promised results. In short, E&O coverage provides protection for you in the event that an error or omission on your part caused a financial loss for your client.

Where do you find quality E&O coverage?
With CSI! We have a team of experienced brokers with expertise in the California Real Estate E&O insurance marketplace. There are no “standard” policy wordings for E&O insurance coverage. Each policy must be read carefully to make sure that the coverage being offered fits your exposures. There is no “one size fits all” E&O policy.

What professional services are typically covered?
While the scope of professional services that are covered by an E&O policy may vary, policies can often be tailored beyond real estate agent activities to add property management, leasing agent, consultant or counselor, appraiser, auctioneer, escrow agent, business broker, mortgage broker or banker, notary public, insurance agent or title agent/abstractor services. Some policies may extend coverage to real estate board or committee membership.

Who is covered under an E&O policy?
Typically, the “named insured” is your real estate company, but the policy usually extends coverage to current employees and independent contractors associated with your company in addition to their personal assistants, and also to former employees, independent contractors or personal assistants if named in a claim.

What are the benefits of Errors and Omissions insurance?
E&0 insurance safeguards your business from catastrophic loss in the event of a client lawsuit, covering both legal expenses and settlements or judgments against you. Remember even baseless claims against your business can require a legal defense. Protecting your business's reputation can require significant funds and can even bankrupt your business. Avoid this unfortunate reality by investing in errors and omissions insurance.

What does an insurance underwriter want to know about my company when it determines my premium?
An insurance company will consider several factors in determining the extent of any coverage it is willing to offer. These factors may include:

• the type of professional services activity(ies) engaged in
• the number of real estate professionals
• the experienced level of the real estate firm
• how long the company has been in existence
• how many complaints or law suits have been brought against the company over the last several years
• whether there are written office policies and procedures and whether they are followed
• the level of internal supervision and office management
• the extent to which training is provided
• the amount of premiums paid in the past

The amount of premium will be influenced by the underwriter’s assessment of these factors, among others, as well as the amount of insurance desired.

What does claims made insurance coverage mean?
Most E&O policies are written on a “claims made” or claims made and reported” form. This means that any claims must be made or, in some cases, made and reported, within the policy period. These policies have a retroactive date that becomes very important. Claims that arise out of accts committed prior to the retroactive date will not be covered. The farther back the retroactive date, the more coverage provided.

What determines my annual premium?
Your firm will be given an initial base rate that is determined by state-by-state experience. From there, the rate is modified to reflect a number of risk factors, including the individual characteristics of your firm, past claims experience, risk management practices, the number of professionals you need to cover, and the limits, deductible, and breadth of coverage you request.

Is E&O coverage really essential?
Whether you're new to the real estate industry or have been in the business for years, the risks you face every day make you a prime target for lawsuits. Over the past two decades, your chances of being sued have risen dramatically. Even if your name is cleared, the time taken away from your business, money spent on defense, and added stress of handling the situation can prove to be taxing. That's why choosing an E&O program that meets the needs and budget of your firm is essential. E&O Insurance helps ease the burden by responding to, defending, and sharing the monetary risks for whatever claims are brought against you.

How can I reduce my premium?
CSI can negotiate many innovative rate credit features to help you reduce your E&O premium, including:

• Attend Risk Management Seminars. Not only will you learn why risk management is important to your firm, but we'll also provide you with 12 key risk management techniques you can begin implementing that same day.
• Maintain an Office Procedures Manual. A good training manual will not only help new real estate professionals acclimate to the field, but seasoned agents will also benefit from having a standard set of procedures in place to help ensure compliance in all client transactions.
• Offer Home Warranties. By offering your clients a home warranty at the time of purchase, you are shifting some of the risk to the warranty company for possible problems that could arise with the house that first year.
• Earn Professional Designations. If 15% of your firm earns professional designations, you will be eligible for additional premium credits.
• Use standard forms from local and state REALTOR® associations. By using standard forms from local REALTOR® boards, you can eliminate some risk factors by making sure your transaction forms and documentation are complete and up to par.

What if I am sued tomorrow over a past activity?
As long as there is a claims-made policy in force at the time the claim is made and that policy provides coverage for prior acts, there would typically be coverage.

Who will defend me if I am sued?
Quality insurance companies employ a staff of highly experienced and specially trained claim adjusters. If defense counsel is needed, your insurance company will appoint legal counsel from a panel of law firms who have extensive experience in real estate E&O liability.

What size deductible should I carry?
This depends on your comfort level, claims experience, cash flow position and range between different premium and deductible levels. This should be reviewed with your CSI broker, as they will provide you with a complete, understandable analysis of your your options.

Where do I report a claim?
If your have been pre-approved to select your preferred claims counsel or you have been assigned a C.A.R. Strategic Defense attorney, we recommend having them submit the claim to your carrier on your behalf, via some form of certifiable mail delivery.  If unsure, please contact CSI at 1-800-949-0640 and we will direct you.

Source and frequency of E&O losses?

• Breach of Contract 7%
• Negligence 29%
• Fraud/Intentional Acts 11%
• Misrepresentation 40%
• Breach of Fiduciary Duty 5%
• Breach of Good Faith 1%
• Concealment 3%
• Others* 4%

* Breach of warranty, antitrust, civil rights/fair housing, indemnification & security violations

Source: 2006 CNA/Victor O. Schinnerer

Alleged problem areas?

• HVAC/Fire 3%
• Sewer/Well 10%
• Plumbing 3%
• Roof 6%
• Structure 10%
• Floor/Wall 3%
• Insect Damage 5%
• Boundary 5%
• Financing 4%
• Investment Value 3%
• Valuation 4%
• Specific Performance 7%
• Drainage 5%
• Buyer’s Financial Stability 3%
• Code Violation 3%
• Other* 26%

* Escrow, flood plains/wetlands, improper repairs, electrical, zoning, etc.

Source: 2006 CNA/Victor O. Schinnerer