What Questions Should I Ask When Shopping for E&O Insurance?

What Questions Should I Ask When Shopping for E&O Insurance?
April 19, 2023 Pearl Insurance
Real estate professional with a clipboard and question marks above their head imagining their real estate firm.

What Questions Should I Ask When Shopping for E&O Insurance?

Deciding where to insure your firm can be overwhelming. You want to make sure your business is fully protected, but sometimes it’s hard to even know where to start. Of course, since E&O policies vary from one insurance company to another, you’ll need to do your due diligence and read the policy itself to fully understand and compare the differences.1

To get you started, our insurance experts have come up with a list of a few questions you can ask insurance representatives to ensure you get an idea of what you’re buying.

1. What are the steps to getting an E&O policy?

Though this question may sound basic, it’s important to understand exactly what steps you’ll have to take in order to insure your business. Every insurance company will have a different process.

At Pearl Insurance, you have several ways to obtain coverage: calling a representative, filling out an online application, or applying via email. After applying for E&O insurance, a representative will reach out to you with a quote so you can decide whether you would like to bind coverage.

2. Who and what is covered under this policy?

Each E&O policy is different, and so is each insurance company. Different insurers will provide different coverages, so it’s important to know what you’re getting. If you want to know what Pearl Insurance’s coverage has to offer, check out our article explaining E&O coverage.

Here are a few specific questions you can ask to know exactly what coverage an insurance company has to offer:

  • Will the policy cover the firm’s employees and independent contractors? Are personal assistants covered if they’re not employees of the firm?1
  • What types of transactions (i.e., residential, commercial, agent-owned) are covered by the policy?
  • What professional services are covered by the policy?1

As a real estate professional, your business is ever-changing to keep up with the real estate market and meet the needs of your clients. Make sure the E&O policies you’re looking at will grow with you to cover any agents and services you might add in the future.

3. How much does your E&O policy typically cost?

You will see varying costs with different insurance companies, but the average yearly cost of E&O insurance for real estate professionals is $665 with an average monthly cost of $55.2

If you want to learn more about coverage costs, check out our article explaining the price of E&O insurance and what factors affect your premium.

4. What are the conditions under which my business is covered?

You want to make sure to fully understand when your business is covered and if there are situations when it isn’t.

For businesses who have already had an E&O policy, it’s important to ask whether or not there is retroactive prior-acts coverage. If there is retroactive prior-acts coverage, you will have continuous coverage that transfers from your prior insurance company if you switch to coverage with a new insurance company. This is a coverage that Pearl Insurance offers our clients.

If your business has an office insurance policy, you’ll want to ask how that policy impacts your E&O coverage. Your office coverage should work in tandem with your liability coverage, but it’s something you want to double-check before you commit to an E&O policy.

Find out if the E&O policy is a claims-made policy. Professional liability and E&O policies differ from your typical auto or homeowners policy. Claims-made policies cover claims that are made against you during the policy period. You’ll want to know if an insurance company has claims-made policies or not before you purchase the policy. If you purchase an E&O policy with Pearl Insurance, your policy will be claims-made.

5. What are the costs, limits, and deductibles of coverage?

This question differs from one insurance company to another but is one of the most important questions to ask when searching for E&O coverage.

Here are a few specific questions you can ask to know exactly what costs, limits, and deductibles an insurance company has to offer:1

  • What limits apply to the amount of coverage available for an individual claim?
  • Are any claims excluded from coverage?
  • Does the policy include a “per claim” limit or an “aggregate” limit for all claims during the policy term?
  • What deductible options do you offer?

Understanding the amount of coverage is important to understanding what is being purchased, and the dollar limits of your policy should be appropriate to your business risk.1 You need to make sure you know exactly what you’re getting from your E&O policy.

6. What do I do if I have a claim?

Depending on the insurance company, there may or may not be claims support representatives who will guide you through the claim submission process.

Since claims coverage is one of the main reasons to have an E&O policy, you want to make sure you’ll be taken care of if or when the time comes to submit a claim. You should not only look into the quality of each company’s customer support, but also ensure you have access to first-rate assistance should a claim arise.

At Pearl Insurance, we have a team of claims support specialists who have expert knowledge in the world of real estate and are there to support you through the claim submission process. We also offer two free hours of legal advice over the phone with an attorney from your state’s panel counsel, plus defense from your state’s panel counsel if you face a claims situation.

Whether you’re submitting your first or your tenth claim, it can be overwhelming, and we want to be there for you to answer any questions you may have along the way.

7. What happens if I exceed the projections I estimated for the first year? Am I still covered?

If you’re a brand new brokerage, you’ll probably be asked to provide an estimate on your projections for the coming year. This helps underwriting gauge the level of risk the insurance company will be assuming and determine a premium for you. At renewal time, the insurance company will take into account your actual gross commission income (GCI) to calculate your premium.

At Pearl Insurance, there is no penalty or loss of coverage if you exceed your first-year projections.

8. Do you offer any exclusive risk management materials with this policy?

Risk management is both avoiding or mitigating inherently risk-potential situations in business and dealing effectively with problems when they inevitably do occur.1 Some insurance companies may include risk management materials as a perk along with your policy.

Pearl Insurance has an entire library of risk management materials at your disposal. Between articles and videos, you’ll find a slew of topics to help protect your business. We send out a monthly risk manager, quarterly e-newsletters, and a risk management webinar so you can avoid the mistakes other real estate professionals have made.

Sample Risk Manager

What makes Pearl Insurance different?

If you’ve done your research, you know that there are many places you could take your business to find an E&O policy. However, Pearl Insurance has been a leading insurer of E&O policies for decades. We can guarantee that your E&O policy through Pearl will be tailored to you and not something generic that’s been modified, pieced together, and missing what you need.

Some of our coverage highlights include:

  • Agent-owned residential property transactions
  • Subpoena assistance (no-cost legal assistance)
  • Lockbox and open house coverage to full policy limits
  • Mold coverage with limits beginning at $100,000
  • Public relations advisory services
  • Fair housing discrimination claims
  • Environmental “Failure to Advise”
  • Many other endorsements including our enhanced cyber liability suite

If you’re looking for quality coverage, you’ve found it. Pearl has been committed to providing real estate professionals with E&O solutions customized for their specific needs for the past 40 years and is sponsored by over 20 national, state, and local associations.

While various policies may seem attractive at first, many programs may not offer the same limit options, coverage enhancements, and policyholder services as those offered through the Pearl Insurance E&O program. Be sure to thoroughly examine all your options to find a plan that works best for your firm’s unique needs.

Want to know more? Find out for yourself.
(800) 447-4982 | pearlinsurance.com/EO-coverage

1“Real Estate E&O Insurance: Understanding the Basics.” NAR, 24 March 2014.

2“E&O Insurance Cost 2022 Price Comparison.” The Cost Guys, 2022.