Many agents ask if Errors and Ommission Insurance (E&O) insurance is required by law. A real estate broker, once licensed by the Department of Real Estate, can broker real estate sales without E&O insurance. They aren’t required by law to have a policy, but any legitimate professional would not conduct business without E&O insurance. So, while an E&O requirement isn’t enforced by the state, it’s still an unoffical requirement to properly conduct real estate brokerage. The implications of listing and selling real estate without E&O insurance are catastrophic. Also, clients deserve to have an agent that is insured.
Now, since we have established that E&O insurance is needed, let’s talk about cost. If you are a lone or independent broker you simply need to call an insurance company and tell them that you need a policy and they will send you a quite for hundreds or maybe thousands of dollars (based on your sales volume) for a year-long policy. For most agents that hang their license with a brokerage, the company has a blanket policy that covers the agents. Every type of transaction, residential, commercial, agent-owned, dual agent, sales price….you name it, affects the cost of the company’s E&O insurance policy. Most companies pass this fee on to the agents in the form of a per transaction risk assessment for, or some sort of charge assessed randomly. Either way, agents have to come up with money to pay a fee for E&O Insurance. This is one important way that Balboa Real Estate is different than other real estate brokerages. Our E&O insurance is included in our transaction fee. This means that agents do not have to pay anything additional out of pocket for E&O insurance. It’s included in our flat fee plan. So, if you want to avoid paying an E&O insurance fee then join a brokerage that pays it for all the agents, might we suggest Balboa Real Estate?
Learn more about Balboa Real Estate’s 100% commission plan here.
