Real Estate Agents and Brokers Professional Liability Policy protects against loss due to wrongful acts committed by a real estate agent in the course of providing realty services.
The insurance company agrees to pay amounts the insured is legally obligated to pay as damages because of a wrongful act. However, the insurance must cover the wrongful act.
For example, Granite Condominiums sued Great Place Real Estate because of the loss in value to the condominium association and its members due to errors made by Great Place. Great Place's insurance company reaches a settlement agreement for $60,000, the amount in damages stated in the lawsuit.
A wrongful act is a term that is defined, consisting of the following:
- The act must be committed, or alleged to have been committed by an insured
- An act, error, or omission must either have actually occurred or is alleged to have occurred.
- The act, error, or omission must arise from professional services.
- The professional services could have been rendered or should have been rendered but were not.
- Damages must arise from the alleged or actual act.
Besides covering wrongful acts, an insurance company would also handle the, often, high expense of providing a legal defense against lawsuits.
A typical Insurance Real Estate Agents and Brokers Professional Liability Policy includes additional protection such as Spousal Liability (protects the assets of an insurance professional's spouse that may be named in a lawsuit), protection of innocent insureds, lock box liability (loss caused to clients due to realtor's mishandling of client residence keys) and claims that are brought based on violations of the Civil Rights Act, the Fair Housing act or any type of rule, statute, or similar regulation.
There are various situations that are not eligible for coverage under an Insurance Agents and Brokers Professional Liability Policy including instances of abuse, bodily injury, property damage, adequate insurance, contractual liability criminal activities, discrimination, electronic data, employment-related practices and many other instances. The exclusions involve either areas that are covered by other types of coverage or which are ineligible for insurance protection as a matter of public policy.