What does an errors and omissions insurance policy typically cover?

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An errors and omissions insurance policy is designed to provide protection for real estate professionals against claims of negligence or inadequate work that results in financial loss for clients. This type of insurance covers legal defense costs and any settlements or judgments that may arise from claims alleging that the agent or broker failed to perform their duties appropriately.

For instance, if a client claims that a salesperson did not disclose important information about a property, the errors and omissions insurance would kick in to help cover the attorney fees incurred while defending against that claim, as well as any potential settlement costs if the case is lost. This type of policy is essential for real estate professionals to ensure they can navigate potential legal pitfalls without bearing the financial burden alone.

The other options do not reflect the main purpose of errors and omissions insurance. Personal health emergencies are not covered, as this coverage focuses on professional liability. Commission disputes pertain to financial disagreements rather than negligence claims, while property damage during transactions is typically covered under a different kind of insurance, such as general liability insurance or property insurance.

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